Bills Digest no. 177 2008–09
Carbon Pollution Reduction Scheme
Amendment (Household Assistance) Bill 2009
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
Date introduced: 28 May 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 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.
The Bills in the package were referred to the Senate
Economics Committee[4] for inquiry and report by 15 June 2009.
The reader is referred to the principal Bills
Digest for full commentary on the CPRS generally.[5]
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’.[6]
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.[7]
The White Paper Fact Sheet on the impact of the scheme on the
cost of living said:
Energy is emission-intensive. At a carbon permit price of
$25, households will face increased energy costs of, on average, $4 per week
for electricity and $2 per week for gas and other household fuels.
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]
. However,
none of the provisions will commence if section 3 of the Carbon Pollution
Reduction Scheme Act 2009 does not commence on or before 1 July 2011.
[2]. Department
of Climate Change, Carbon Pollution Reduction Scheme Green Paper,
Department of Climate Change, Canberra, July 2008, p. 277.
[3]. Explanatory
Memorandum, Carbon Pollution Reduction Scheme Amendment (Household Assistance)
Bill 2009, p. i.
[4]. Senate
Economics Committee, Inquiry into the carbon pollution reduction scheme bill
2009 and related bills, Parliament of Australia website, viewed 19 June
2009, http://www.aph.gov.au/Senate/committee/economics_ctte/cprs_2_09/index.htm.
[5]. L Nielson,
J Styles, A Talberg and J Tomaras, ‘Carbon Pollution Reduction Scheme Bill
2009’, Bills digest¸ no. 165, 2008–09, Parliamentary Library,
Canberra, 2009, viewed on
19 June 2009, http://www.aph.gov.au/Library/pubs/bd/2008-09/09bd165.pdf
[6]. Combined
Pensioners and Superannuants Association of New South Wales Inc., Submission, Carbon Pollution Reduction Scheme Green Paper, 10 September, 2009 (sic), to
be found at: www.cpsa.org.au.
[7]. St Vincent
de Paul Society, Submission to the Department of Climate Change, Carbon
Pollution Reduction Scheme, September 2008, viewed 19 June 2009, http://www.climatechange.gov.au/greenpaper/consultation/pubs/0785-st-vincent-de-paul-society.pdf
[8]. Australian
Government, Scheme Impact on the Cost of Living, Fact Sheet, Canberra,
December 2008, viewed 19 June 2009, http://www.climatechange.gov.au/whitepaper/factsheets/pubs/026-scheme-impact-on-the-cost%20of-living.pdf
[9]. R Denniss,
Fixing the Floor in the ETS, The role of energy efficiency in reducing
Australia’s emissions, Research Paper No. 59, November 2008.
[10]. A Robb,
Shadow Minister for Infrastructure and COAG and Shadow Minister Assisting the Leader
on Emissions Trading Design, House of Representatives, Debates, 4
June 2009,
p. 49.
[11]. L Dodson,
‘The heat is on to reach a deal on emissions trading’, Australian financial
review, 15 June 2009, p. 5.
[12]. P Coorey,
Opinion, ‘No rush now for that dignity fix’, Sydney morning herald, 15
June 2009, p. 9.
[13]. Economics
Legislation Committee, Carbon Pollution Reduction Scheme Bill 2009 and related
bills [Provisions], Report, 15 June 2009.
[14]. Explanatory
Memorandum, Carbon Pollution Reduction Scheme Amendment (Household Assistance)
Bill 2009, p. 3.
[15]. Explanatory
Memorandum, pp. 5–7.
[16]. Explanatory
Memorandum, p. 7.
[17]. Explanatory
Memorandum, p. 7.
[18]. Explanatory
Memorandum, p. 11. Further details on Part 2 can be found at pp. 11–16 of the
Explanatory Memorandum.
[19]. Explanatory
Memorandum, p. 17.
[20]. J Macklin
(Minister for Families, Housing, Community Services and Indigenous Affairs),
‘Second Reading Speech: Carbon Pollution Reduction Scheme Amendment (Household
Assistance) Bill 2009’, House of Representatives, Debates, 28 May 2009,
p. 12.
Diane Spooner
19 June 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.
|
