|
It should
be noted that the name of this Bill as introduced on 22 October 2009 is
actually the Carbon Pollution Reduction Scheme Amendment (Household
Assistance) Bill 2009. This Bill is identical to the earlier Bill
of the same name which was first introduced in the House of Representatives
on 28 May 2009, passed unamended on 4 June 2009, but then negatived by
the Senate on 13 August 2009.
The addition of the reference ‘[No. 2]’
has been made by the Department of the House of Representatives Table
Office to indicate that the Bill is introduced for a second time.
Bills Digest no. 50 2009–10
Carbon Pollution Reduction Scheme Amendment (Household Assistance)
Bill 2009 [No. 2]
WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments. This Digest does not have
any official legal status. Other sources should be consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage history
Purpose
Background
Financial implications
Main provisions
Contact officer & copyright details
Passage history
Carbon
Pollution Reduction Scheme Amendment (Household Assistance) Bill 2009
[No. 2]
Date introduced: 22 October 2009
House: House of Representatives
Portfolio: Families, Housing, Community Services
and Indigenous Affairs
Commencement: Sections 1 to 3 on Royal Assent.
Schedules 1, 2, 3 (Part 2, Division 1 and Part 2, Division 2), 4 and 5
(Part 1) commence on 1 July 2011. Schedule 5, Part 2 commences on 1 July
2012.[1]
Links: The relevant
links to the Bill, Explanatory Memorandum and second reading speech
can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/. When Bills
have been passed they can be found at ComLaw, which is at http://www.comlaw.gov.au/.
The purpose of the Bill is to provide financial assistance
to low and middle-income households from the expected increases in the
cost of living arising from the introduction of the Carbon Pollution Reduction
Scheme (CPRS). The Bill is part of a package comprising 11 Bills, the
principal one being the Carbon Pollution Reduction Scheme Bill 2009.
The Carbon Pollution Reduction Scheme Amendment (Household Assistance)
Bill 2009 (the original Bill) was first introduced into Parliament
in May 2009 as part of the 11-Bill Carbon Pollution Reduction Scheme (CPRS)
package of legislation. Along with the other CPRS Bills, the original
Bill was passed by the House of Representatives on 4 June, but negatived
in the Senate on 13 August 2009.
The content of the current Bill, the Carbon Pollution Reduction Scheme
Amendment (Household Assistance) Bill 2009 [No.2], is identical
to the original Bill. As such, this Digest is unchanged from the Digest produced
in June for the original Bill. For commentary on recent developments regarding
the proposed CPRS, including the reintroduction of the CPRS Bills, see
relevant sections in the Digest on the Carbon Pollution Reduction Scheme
Bill [No. 2] 2009.
The Carbon Pollution Reduction Scheme Green Paper[2] outlined, in Chapter 8, the proposed
household assistance measures and the impacts of the CPRS on households.
The commitments outlined in the Green Paper of the Government are to:
- increase payments, above automatic indexation, to people in receipt
of pensioner, carer, senior and allowance benefits and provide other
assistance to meet the overall increase in the cost of living flowing
from the scheme
- increase assistance to other low-income households through the tax
and payment system to meet the overall increase in the cost of living
flowing from the scheme
- provide assistance to middle-income households to help them meet any
overall increase in the cost of living flowing from the scheme
- review annually in the Budget context the adequacy of payments to
beneficiaries and recipients of family assistance to assist households
with the overall impacts of the scheme, noting that these payments are
automatically indexed to reflect changes in the cost of living, and
- provide additional support through the introduction of energy efficiency
measures and consumer information to help households take practical
action to reduce energy use and save on energy bills so that all can
make a contribution.
The Government has also indicated in the terms of reference for Australia’s
Future Tax System Review that it is to consider the interrelationships
between the tax and transfer payment systems and the scheme.
According to the outline in the Explanatory Memorandum:
It is anticipated that the Carbon Pollution Reduction
Scheme will result in increases in the cost of living of 0.4 per cent
in 2011–12 and 0.8 per cent in 2012–13, resulting from an initial $10
per tonne fixed carbon price in 2011–12 and a flexible carbon price
in 2012–13.[3]
In this Bill the Government is proposing to provide assistance with upfront
support to low and middle-income households through a package of direct
cash assistance and tax offsets to help these households adjust. It will
do this by amending the Social Security Act 1991, the A New
Tax System (Family Assistance) Act 1999, the Veterans’ Entitlements
Act 1986 the Military Rehabilitation and Compensation Act 2004,
the Income Tax Assessment Act 1936, the Medicare Levy Act 1986,
and some related administration Acts.
At the time
of writing, the current Bill has not been referred to any committee. The
original Bill, along with the others in the CPRS package, was referred
to the Senate Standing Committee on Economics for inquiry and report by
15 June 2009. Details of the inquiry are at http://www.aph.gov.au/senate/committee/economics_ctte/cprs_2_09/index.htm
The reader is referred to the principal Bills
Digest for full commentary on the CPRS generally.[4] There has been some feedback as a consequence
of the Green Paper on the impact of the CPRS on low income earners. For
example, the Combined Pensioners and Superannuants Association of New
South Wales Inc. in its submission welcomed the Government’s recognition
that the CPRS is forecast to increase household costs by 0.9 per cent
and pensioner household costs by 1.1 per cent (on average), and noted
it ‘is imperative that these costs are covered by the Australian Government
to ensure that financial hardship is not felt by low income households’.[5]
Similarly, the St Vincent de Paul Society in its submission on the Green
Paper stated:
The cost allocation of both the carbon trading arrangements
and the interval meter rollout on household bills are likely to be apportioned
in the first block of consumption for the carbon trading arrangements,
as this component of household consumption will be dominated by base load
energy generation and hence the bulk of carbon emissions. While the interval
meter rollout cost will most likely be apportioned to changes in the fixed
energy charge.
In both cases this will see the cost of both disproportionally
impacting upon lower energy consuming households, that is, low income
and the environmentally conscious. Obviously an unintended, but perverse,
policy outcome.[6]
The White Paper Fact Sheet on the impact of the scheme on the cost of
living noted that energy is emission-intensive. At a carbon permit price
of $25, it estimated households will face increased energy costs of, on
average, $4 per week for electricity and $2 per week for gas and other
household fuels. [7] The fact sheet when on to say:
- For an average household, these estimates are the upper bound of the
estimated increase in energy costs. They assume that permit costs are
immediately and fully passed through to consumers, that firms do not
change their production processes, and that households do not change
their consumption behaviour in response to the Scheme (for example,
by conserving energy).
- Assistance to low-income households will fully meet the expected overall
increase in their cost of living.
- Assistance to middle-income households will help meet the expected
overall increase in their cost of living.
- All households will benefit from fuel tax reductions and support to
take practical action to reduce energy bills.[8]
However, the Australia Institute argues that it is important that there
are ‘complementary measures’ to translate household energy savings into
real financial and environmental benefits. It argues that price increases
will not make consumers change their behaviour. In fact, the only option
to individuals who wish to reduce emissions below the level set by the
government is to purchase emissions permits and then ‘rip them up’.[9]
The Opposition spokesperson, Andrew Robb MP, indicated that the Opposition
will also oppose this particular Bill. He stated in his second reading
speech in the House of Representatives:
If this scheme were working in tandem with the schemes
of other countries around the world, the impact would not be anywhere
as severe and the requirement for compensation would not be anywhere
near as severe. The issue of churn and recycling in the community and
the cost of administration associated with that all amounts to poor
policy and for that reason we are opposed to this bill.[10]
The Opposition position is to oppose the emissions trading
scheme until after the convention in Copenhagen[11], and according to another report:
The Greens believe the scheme is too soft, the Nationals
don’t believe we need a scheme, and Nick Xenophon thinks it needs more
work.[12]
Family First Senator Fielding at the time of writing was still considering
his position.
The Senate Economics Committee provides a table on the fiscal impact
of CPRS package sourced to the Explanatory Memorandum of this Bill.[13]
Schedule 1 Part 1 inserts new Division 8 – Increases related
to Carbon Pollution Reduction Scheme – into the Social Security Act
1991. Proposed section 1206GF sets out the objects of the new
Division which are to increase the amounts of social security payments
to persons receiving the:
- age pension
- Austudy payment
- bereavement allowance
- carer payment
- disability support pension
- Newstart allowance
- parenting payment
- partner allowance
- sickness allowance
- widow allowance
- widow B pension
- wife pension
- youth allowance, and
- payments that the Minister has specified by legislative instrument
under proposed section 1206GM
Another object is to adjust indexation of those amounts after they are
increased (proposed subsection 1206GF(2)). The Explanatory Memorandum
states the adjustment is to avoid duplicating assistance.[14]
The increases will be by 2.8 per cent over two years. There will be
a 1 per cent increase on 1 July 2011 (proposed section 1206GH)
and another of 1.8 per cent on 1 July 2012 (proposed section 1206GI).
As indicated in the Second reading speech, this is additional support,
above indexation, to fully meet the expected overall increase in the cost
of living flowing from the scheme.
Subdivision C, proposed sections 1206GJ and 1206GK provide
for adjusted CPI indexation of the increased amounts.[15]
Proposed subdivision D allows other provision for increases and
adjustments. According to the Explanatory Memorandum:
The need for this section arises as a result of forthcoming
amendments to the Social Security Act flowing from the Government’s
Secure and Sustainable Pension Reform package. Those forthcoming amendments
have not been finalised at the time of introduction of this bill, and
therefore, capacity has been built into this bill to address these aspects
by way of a legislative instrument.[16]
Proposed section 1206GL therefore allows the Minister to provide
for increases in rates by way of legislative instrument. Any such instruments
made will be disallowable by Parliament. There will be amendments necessary
to this subdivision when the pension reforms bill is produced.[17]
Under Schedule 1, Part 2 – Transitional payments, two payments
will be made to qualifying individuals. These transitional payments are
to be made to adults in low-income households who do not receive sufficient
assistance from other measures in the Bill. According to the Explanatory
Memorandum[18] summary
on this Part of the Bill, two payments will be made to qualifying individuals.
The first payment from 1 July 2012 will be a flat $200 per claimant. The
second payment from 1 July 2013 will be a flat $550 per claimant (proposed
paragraphs 1061XAAZC (a) and (b) respectively). To qualify
the claimant has to satisfy the income requirements set out in proposed
section 1061ZAAZ of $30 000 (single no children), $45 000 (couple
no children) or $60 000 (singles, and/or couples with a dependent child).
Note in the case of couples, because of the operation of clause 3 of Schedule
3 to the A New Tax System (Family Assistance) Act 1999, it is a
couples combined income is to be taken into account when determining whether
a person meets the income requirement. There are also additional conditions
before a person qualifies for the payment – these are set out in proposed
sections 1061ZAAZA and 1061 ZAAZB.
Schedule 2 - Assistance to Families, amends the A New Tax
System (Family Assistance) Act 1999 to insert proposed Part 6 –
FTB combined supplement- into that Act, and consequential amendments
to the A New Tax System (Family Assistance) (Administration) Act 1999.
According to the Explanatory Memorandum[19],
the Schedule provides for an increase in certain family tax benefit rates
on 1 July 2011 and again on 1 July 2012, in addition to usual indexation
on those dates.
Schedules 3 and 4 make amendments to the Veterans’ Entitlements
Act 1986 and the Military Rehabilitation and Compensation Act 2004.
Schedule 5 amends the Income Tax Assessment Act 1936 to
increase the low income tax offset to $1 650 for the 2011–12 income year
and to $1 930 for the 2012–13 income year and later income years. For
senior eligible Australians:
From 1 July 2011, eligible senior Australians will have
no tax liability until their income reaches $41 272 for singles and $27
680 for each member of a couple. From 1 July 2012, eligible senior Australians
will have no tax liability until their income reaches $32 948 for singles
and $29 547 for each member of a couple. Adjustments will also be made
to the Medicare levy thresholds for senior Australians.[20]
Diane Spooner
29 October 2009
Bills Digest Service
Parliamentary Library
© Commonwealth of Australia
This work is copyright. Except to the extent of uses permitted by the
Copyright Act 1968, no person may reproduce or transmit any part of this
work by any process without the prior written consent of the Parliamentary
Librarian. This requirement does not apply to members of the Parliament
of Australia acting in the course of their official duties.
This work has been prepared to support the work of the Australian Parliament
using information available at the time of production. The views expressed
do not reflect an official position of the Parliamentary Library, nor
do they constitute professional legal opinion.
Feedback is welcome and may be provided to: web.library@aph.gov.au.
Any concerns or complaints should be directed to the Parliamentary Librarian.
Parliamentary Library staff are available to discuss the contents of publications
with Senators and Members and their staff. To access this service, clients
may contact the author or the Library’s Central Entry Point for
referral.
|
