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Alert Digest 1999

Scrutiny of Bills Alert Digest No. 2 of 1999

17 February 1999

ISSN 1329-668X

MEMBERS OF THE COMMITTEE

Senator B Cooney (Chairman)

Senator W Crane (Deputy Chairman)

Senator H Coonan

Senator T Crossin

Senator J Ferris

Senator A Murray

TERMS OF REFERENCE

Extract from Standing Order 24

(1)

(a) At the commencement of each Parliament, a Standing Committee for the Scrutiny of Bills shall be appointed to report, in respect of the clauses of bills introduced into the Senate, and in respect of Acts of the Parliament, whether such bills or Acts, by express words or otherwise:

(i) trespass unduly on personal rights and liberties;

(ii) make rights, liberties or obligations unduly dependent upon insufficiently defined administrative powers;

(iii) make rights, liberties or obligations unduly dependent upon non-reviewable decisions;

(iv) inappropriately delegate legislative powers; or

(v) insufficiently subject the exercise of legislative power to parliamentary scrutiny.

(b) The Committee, for the purpose of reporting upon the clauses of a bill when the bill has been introduced into the Senate, may consider any proposed law or other document or information available to it, notwithstanding that such proposed law, document or information has not been presented to the Senate.

CONTENTS

Airports Amendment Bill 1999

Bounty (Ships) Amendment Bill 1999

Customs Tariff Amendment Bill (No. 1) 1999

Financial Management Legislation Amendment Bill 1999

Further 1998 Budget Measures Legislation Amendment (Social Security) Bill 1999

Taxation Laws Amendment (Software Depreciation) Bill 1999

Textile, Clothing and Footwear Strategic Investment Program Bill 1999

Year 2000 Information Disclosure Bill 1999

Youth Allowance Consolidation Bill 1999

Provisions imposing criminal sanctions for failure to provide information

Airports Amendment Bill 1999

This bill was introduced into the House of Representatives on 11 February 1999 by the Minister for Transport and Regional Services. [Portfolio responsibility: Transport and Regional Services]

The bill proposes to amend the Airports Act 1996 to:

• extend the time available to some airport lessees to have access undertakings to airport services approved by the Australian Competition and Consumer Commission;
• capture activities of a non-structural nature that intrude into protected airspace and may impair the ability to pilot an aircraft; and
• make technical amendments.

The Committee has no comment on this bill.

Bounty (Ships) Amendment Bill 1999

This bill was introduced into the House of Representatives on 10 February 1999 by the Parliamentary Secretary to the Minister for Industry, Science and Resources. [Portfolio responsibility: Industry, Science and Resources]

The bill proposes to amend the Bounty (Ships) Act 1989 to:

• extend the payment of the shipbuilding construction bounty from 1 July 1999 until 31 December 2000 at a rate of three per cent;
• establish a phasing arrangement for vessels which are contracted for sale on or before 31 December 2000 and delivered on or before 31 December 2003;
• provide transitional arrangements;
• provide for the payment of a research and development bounty (the Shipbuilding Innovation Scheme (SIS)) to registered shipbuilders for eligible research and development expenditure;
• provide that SIS apply only to construction and modification completed on or before 30 June 2004; and
• make amendments consequential on new administrative arrangements.

The Committee has no comment on this bill.

Customs Tariff Amendment Bill (No. 1) 1999

This bill was introduced into the House of Representatives on 11 February 1999 by the Minister representing the Minister for Industry, Science and Resources. [Portfolio responsibility: Justice and Customs]

The bill proposes to amend the Customs Tariff Act 1995 to:

• phase down the customs rate of duty for textiles, clothing and footwear from 1 January 2005; and
• repeal the Textiles, Clothing and Footwear Import Credits Scheme from 30 June 2000.

The Committee has no comment on this bill.

Financial Management Legislation Amendment Bill 1999

This bill was introduced into the House of Representatives on 10 February 1999 by the Parliamentary Secretary to the Minister for Finance and Administration. [Portfolio responsibility: Finance and Administration]

The bill proposes to enable Commonwealth financial legislation to move to an integrated accrual budgeting, resource management and financial reporting framework primarily by:

• repealing provisions dealing with “fund accounting” and establishing “Special Accounts” within the Consolidated Revenue Fund (CRF);
• effecting the merger of the Loan Fund, Reserved Money Fund and Commercial Activities Fund with the CRF;
• removing the requirement for debiting and crediting various transactions to the CRF;
• repealing the Loan Consolidation and Investment Reserve Act 1955; and
• removing the requirement for monthly reporting of the cash transactions of funds, with arrangements for a phase-in of accrual based monthly statements from 1 July 1999.

Insufficient Parliamentary scrutiny

Proposed new section 22

Item 17 in the Schedule to this bill proposes to insert a new section 22 in the Financial Management and Accountability Act 1997. This section will apply to determinations made by the Finance Minister relating to the establishment of “Special Accounts”. Under proposed section 22, such determinations are disallowable instruments, but the disallowance motion must be passed within 5 sitting days of the tabling of the determination. Under proposed subclause 22(4), if no such resolution is passed, the determination becomes effective on the day immediately after the last day on which such a resolution could have been passed.

The Committee notes that the usual period for disallowance (under the Acts Interpretation Act 1901) is 15 days. In principle, a reduction in this period may constrain the ability of the Parliament to undertake proper scrutiny of disallowable instruments. Any such constraint should be justified by weighty reasons.

The Committee notes that proposed section 22 is in much the same form as the existing provision. This provision was considered by the Committee in Alert Digest No 1 of 1997. In its consideration of that provision, the Committee observed that:

• subclause 22(4), which provides that a determination is not to come into effect until after the expiry of the disallowance period, differs from the usual approach under which a determination takes effect before the disallowance period and remains operative unless it is disallowed; and
• the Explanatory Memorandum notes that subclause 22(4) thus avoids the legal and practical problem that drawings against a lawfully available appropriation cannot be subsequently disallowed and recovered.

With regard to the existing section 22, the Committee concluded that it “achieves the necessary balance between the need to allow sufficient time for Parliamentary scrutiny of the determinations and the need not to delay unduly legitimate financial transactions of the Government”.

The Explanatory Memorandum to the current bill states that proposed section 22 “serves the same purpose as the repealed section 22, but refers to determinations relating to Special Accounts” (which are intended to replace the Funds regulated by the existing provision).

The Committee's acceptance of the existing provision is equally applicable to the provision which proposes to replace it. A shorter disallowance period, together with a qualification that ensures that the subordinate legislation cannot take effect until after that disallowance period has passed, seems to achieve an appropriate balance between the financial needs of government and the need for Parliamentary scrutiny.

However, the Committee is concerned that the Parliament may not be aware that a shorter disallowance period applies to such determinations. Where such determinations are introduced, the Committee suggests that the Parliament should be specifically informed that they are subject to a disallowance period of less than 15 days. Indeed, as a matter of principle, the Parliament should be informed of shorter disallowance periods whenever they apply to disallowable instruments tabled in either House.

Other than this, the Committee makes no further comment on this provision.

Further 1998 Budget Measures Legislation Amendment (Social Security) Bill 1999

This bill was introduced into the House of Representatives on 11 February 1999 by the Minister for Community Services. [Portfolio responsibility: Family and Community Services]

The bill proposes to amend the following Acts:

Social Security Act 1991 to:

• abolish the concept of “special maintenance”;
• provide for a Community Development Employment Projects (CDEP) participant supplement of $20 per fortnight;
• provide access for CDEP workers to rent assistance, bereavement payments, telephone allowance; pharmaceutical allowance and the health care card;
• rationalise income tests in relation to CDEP wages to provide for a direct deduction up to the equivalent of the maximum basic rate of allowance;
• introduce a special employment advance for people in financial hardship moving from social security payments into work where money has been earned but not yet paid;
• abolish the employment entry payment and narrow application of the education entry payment provisions;
• establish a one-off crisis payment to assist people in financial hardship when they are forced to leave their home and establish a new one due to a limited number of circumstances;
• extend the application of the payment of a social security pension to people overseas to people who have transferred to an age pension whilst overseas;
• amend provisions relating to the rates of pensions payable under portability arrangements;
• allow the waiver of some debts arising under an international social security agreement;
• ensure that persons who seek, and are offered, work outside of their local area will be required to accept that work, or be subject to an activity test breach;
• tighten arrangements for unemployed persons who move to an area of lower employment prospects;
• remove inconsistencies in the application of the liquid assets test waiting period to claims for newstart allowance and sickness allowance where the claimant or their partner is an education leaver;
• introduce a two-tiered payment structure for austudy pensioner education supplement, geared to the study load taken by the student;

Social Security Act 1991 and Health Insurance Act 1973 to ensure the newly arrived residents' waiting period is consistently applied to all prospective migrants and that the waiting period is served in Australia; and

Health Insurance Act 1973 to make a minor technical correction.

The Committee has no comment on this bill.

Taxation Laws Amendment (Software Depreciation) Bill 1999

This bill was introduced into the House of Representatives on 11 February 1999 by the Minister for Financial Services and Regulation. [Portfolio responsibility: Treasury]

The bill proposes to amend the Income Tax Assessment Act 1936 and Income Tax Assessment Act 1997 to:

• allow a taxation deduction to be claimed over 2½ years for spending incurred in acquiring, commissioning or developing software; and
• allow an immediate deduction for expenditure in acquiring new software or substantially rebuilding current software which has the predominant nature of ensuring Y2K compliance.

Retrospective effect

Item 21

Item 21 in the Schedule to this bill states that the amendments made by this Schedule apply to expenditure on software after 10am on 11 May 1998 – the day before last year's Budget. However, these amendments are beneficial to taxpayers.

In these circumstances, the Committee makes no further comment on these provisions.

Textile, Clothing and Footwear Strategic Investment Program Bill 1999

This bill was introduced into the House of Representatives on 11 February 1999 by the Minister representing the Minister for Industry, Science and Resources. [Portfolio responsibility: Industry, Science and Resources]

The bill proposes to establish the framework for the implementation of a five year Textile, Clothing and Footwear Strategic Investment Program.

Abrogation of the privilege against self-incrimination

Clause 36

Clause 36 of this bill, if enacted, will abrogate the privilege against self-incrimination. However, proposed subclause 36(2) states that any information obtained, either directly or indirectly, as a result of compulsion will be inadmissible in evidence in criminal proceedings against the person compelled (other than proceedings for making a false statement).

In these circumstances, the Committee makes no further comment on this provision.

Year 2000 Information Disclosure Bill 1999

This bill was introduced into the House of Representatives on 11 February 1999 by the Minister representing the Minister for Communications, Information Technology and the Arts. [Portfolio responsibility: Communications, Information Technology and the Arts]

The bill proposes to provide for voluntary disclosure and exchange of information about Year 2000 problems, remediation efforts and compliance.

The Committee has no comment on this bill.

Youth Allowance Consolidation Bill 1999

This bill was introduced into the House of Representatives on 11 February 1999 by the Minister for Community Services. [Portfolio responsibility: Family and Community Services]

The bill proposes to amend the:

• Social Security Act 1991 to incorporate provisions contained in the Social Security (Fares Allowance) Rules 1998, Social Security Student Financial Supplement Scheme 1998, the Social Security (Family Actual Means Test) Regulations 1998; and
• Social Security Act 1991 and five other Acts to make consequential and technical amendments related to the implementation of the youth allowance package.

Retrospective effect

Subclauses 2(3) to (13)

Schedule 4 to this bill proposes to amend the Social Security Act 1991 “to address certain technical issues identified during the implementation of the youth allowance package”. The Explanatory Memorandum notes that these amendments make “minor drafting clarifications and technical refinements to ensure that the youth allowance package operates in line with the original policy intentions, including the alignment where appropriate with the pre-existing AUSTUDY provisions”. By virtue of subclauses 2(3) to (13), the items in Part 2 of Schedule 4 are to be taken to have commenced at various times on 1 July 1998.

Schedule 5 to the bill amends legislation other than the Social Security Act to reflect the new placement and structure of the student financial supplement scheme provisions. By virtue of subclause 2(3), Part 2 of Schedule 5 is also to be taken to have commenced on 1 July 1998.

By virtue of subclause 2(14), Part 3 of Schedule 4 is to be taken to have commenced on 20 September 1998, and by virtue of subclause 2(15), Part 4 of Schedule 4 is to be taken to have commenced on 1 January 1999.

While it is likely that the various amendments proposed in these Schedules are technical or consequential, and make no substantive change to the law, the Explanatory Memorandum does not clarify the need for retrospectivity. The Committee, therefore, seeks the Minister's advice on the need for retrospectivity in the application of Schedules 4 and 5 of the bill.

Pending the Minister's advice, the Committee draws Senators' attention to the provisions, as they may be considered to trespass unduly on personal rights and liberties in breach of principle 1(a)(i) of the Committee's terms of reference.

Use of tax file numbers

Proposed new sections 1061ZZBP and 1061ZZBQ

Schedule 2 to this bill proposes to amend the Social Security Act 1991 (the Act) to incorporate the student financial supplement provisions currently contained in separate legislation. The Explanatory Memorandum notes that, for the most part, “there is no change in effect between the provisions of the Financial Supplement Scheme and those of the new Chapter 2B [of the Social Security Act]”.

Among the provisions to be incorporated in Chapter 2B of the Act are proposed new sections 1061ZZBP and 1061ZZBQ. These sections, if enacted, would make the payment of financial assistance to category 2 students conditional upon the recipient providing either his or her tax file number, or that of his or her parent or parents.

With regard to these provisions, the Explanatory Memorandum states that “the tax file number provisions have been put into the standard Social Security Act form”. It further states that “these provisions are applicable only to category 2 students because category 1 students are already subject to such rules under their substantive payments”.

The Committee recognises that these clauses are not new, and have been included to minimise the opportunity for fraud against the Commonwealth. The provision of a tax file number is now a common requirement throughout social security (and other related) legislation. However, the Committee notes the words of the then Treasurer in the Parliament on 25 May 1988 when referring to the proposed introduction of the tax file number scheme:

The only purpose of the file number will be to make it easier for the Tax Office to match information it receives about money earned and interest payments.

This system is for the exclusive and limited use of the Tax Office – it will simply allow the better use of information the Tax Office already receives.

The Committee also notes the words of the then member for Kooyong in the Parliament on 21 December 1990, that “since the inception of the tax file number in 1988 as an identifying system, we have seen the gradual extension of that system to other areas by way of a process sometimes referred to as function creep”.

This process has continued and grown over a number of years, irrespective of the governing party of the day, and in spite of assurances that it would not occur. The provisions of this bill represent yet another example of this process.

In these circumstances, the Committee draws Senators' attention to the provisions, as they may be considered to trespass unduly on personal rights and liberties in breach of principle 1(a)(i) of the Committee's terms of reference.

Provisions imposing criminal sanctions for failure to provide information

The Committee's Eighth Report of 1998 dealt with the appropriate basis for penalty provisions for offences involving the giving or withholding of information. The following Table sets out the penalties for such offences in the legislation covered in this Digest.

TABLE

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