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
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