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Minerals Resource Rent Tax Repeal and
Other Measures
Bill 2013 [No. 2]
Portfolio: Treasury
Introduced: House of Representatives, 23 June
2014
Purpose
1.1
This bill proposes to repeal the mineral resources rent tax (MRRT) by
repealing a number of acts (Schedule 1).[1]
It also makes consequential amendments to other legislation,[2]
required as a result of the repeal of the MRRT (Schedules 2- 9).
1.2
This bill also seeks to repeal the following MRRT-related measures:
loss-carry back (Schedule 2); geothermal expenditure deduction (Schedule 5);
low income superannuation contribution (Schedule 7); the income support bonus
(Schedule 8); and schoolkids bonus (Schedule 9).
1.3
The bill will revise the following MRRT-related measures: capital
allowances for small business entities (Schedules 3 and 4); and the
superannuation guarantee charge percentage increase (Schedule 6).
Background
1.4
This bill is a reintroduction of the Minerals Resource Rent Tax Repeal
and Other Measures Bill 2013 which the committee considered in its First Report
of the 44th Parliament.[3]
1.5
The committee considered the Parliamentary Secretary to the Treasurer's
response in its Eighth Report of the 44th Parliament and noted that the
response had not provided a detailed and evidence-based explanation for the
measures in accordance with the committee's usual expectations.[4]
Committee view on compatibility
Right to social security
1.6
The right to social security is guaranteed by article 9 of the
International Covenant on Economic, Social and Cultural Rights (ICESCR). This
right recognises the importance of adequate social benefits in reducing the
effects of poverty and plays an important role in realising many other
economic, social and cultural rights, particularly the right to an adequate
standard of living and the right to health.
1.7
Access to social security is required when a person has no other income
and has insufficient means to support themselves and their dependents.
Enjoyment of the right requires that sustainable social support schemes are:
-
available to people in need;
-
adequate to support an adequate standard of living and health
care; and
-
accessible (providing universal coverage without discrimination
and qualifying and withdrawal conditions that are lawful, reasonable,
proportionate and transparent; and
-
affordable (where contributions are required).
1.8
Under article 2(1) of ICESCR, Australia has certain obligations in
relation to the right to social security. These include:
-
the immediate obligation to satisfy certain minimum aspects of
the right;
-
the obligation not to unjustifiably take any backwards steps that
might affect the right;
-
the obligation to ensure the right is made available in a
non-discriminatory way; and
-
the obligation to take reasonable measures within its available
resources to progressively secure broader enjoyment of the right.
1.9
Specific situations which are recognised as engaging a person's right to
social security, include health care and sickness; old age; unemployment and
workplace injury; family and child support; paid maternity leave; and
disability support.
Right to an adequate standard of living
1.10
The right to an adequate standard is guaranteed by article 11(1) of the
ICESCR, and requires States parties to take steps to ensure the availability,
adequacy and accessibility of food, clothing, water and housing for all people
in Australia.
1.11
The obligations of article 2(1) of the ICESCR also apply in relation to
the right to an adequate standard of living, as described above in relation to
the right to social security.
Deferral of proposed increase in compulsory superannuation
contribution
1.12
Schedule 6 of the bill defers by two years the proposed gradual increase
in the compulsory superannuation contribution by employers to 12 per cent.
1.13
The statement of compatibility concludes that Schedule 6 does not engage
any human rights, noting that the measure to defer the proposed increase in the
compulsory superannuation contribution:
...does not affect an individual's eligibility for the social
security safety net of the Age Pension (funded from Government revenue), which
continues to be a fundamental part of Australia‘s retirement income system to
ensure people unable to support themselves can have an adequate standard of
living.[5]
1.14
The committee considers that the provision of superannuation engages
both the right to an adequate standard of living[6]
and the right to social security.[7]
A similar view was consistently taken by the committee during the previous
parliament.[8]
1.15
The proposed increase in the superannuation guarantee may be viewed as a
measure to promote both of these rights. The deferral of the introduction of
that measure may therefore be viewed as a limitation on these rights.
1.16
The committee's usual expectation where a limitation on a right is
proposed is that the statement of compatibility provide an assessment of
whether the limitation is reasonable, necessary, and proportionate to achieving
a legitimate objective. The committee notes that to demonstrate that a
limitation is permissible, legislation proponents must provide reasoned and
evidence-based explanations of why the measures are necessary in pursuit of a
legitimate objective.
1.17
The committee therefore seeks the Treasurer's advice as to
whether the deferral of the proposed increase to the compulsory superannuation
contribution by two years is compatible with the right to social security and
the right to an adequate standard of living and particularly:
-
whether the proposed changes are aimed at achieving a
legitimate objective;
-
whether there is a rational connection between the limitation
and that objective; and
-
whether the limitation is reasonable and proportionate measure
for the achievement of that objective.
Repeal of low-income superannuation contribution
1.18
Schedule 7 of the bill proposes to repeal the low income superannuation
contribution (LISC) for contributions made for financial years starting on or
after 1 July 2013. The statement of compatibility concludes that Schedule
7 does not engage any human rights, noting that the LISC:
...was funded with the expected revenue from the MRRT, which is
being repealed. In order to ensure that the concessions in the superannuation
system are sustainable for present and future generations, the LISC is also
being repealed.[9]
1.19
As discussed above, the committee considers that the provision of
superannuation engages both the right to an adequate standard of living,[10]
and the right to social security.[11]
1.20
The reduction of the amount paid to low-income earners to compensate
them for the tax paid on their superannuation contributions limits these
rights.
1.21
The committee's usual expectation where a limitation on a right is
proposed is that the statement of compatibility provide an assessment of
whether the limitation is reasonable, necessary, and proportionate to achieving
a legitimate objective.
1.22
The committee therefore seeks the Treasurer's advice as to whether
the repeal of the LISC is compatible with the right to social security and the
right to an adequate standard of living, and particularly:
-
whether the proposed changes are aimed at achieving a
legitimate objective;
-
whether there is a rational connection between the limitation
and that objective; and
-
whether the limitation is reasonable and proportionate measure
for the achievement of that objective.
Repeal of the low-income support
bonus (Schedule 8)
1.23
Schedule 8 proposes to repeal the low-income support bonus (ISB).[12]
The ISB was intended to provide payments to eligible recipients to help them
plan expenditure and provide a buffer against unexpected costs.[13]
1.24
The statement of compatibility notes that the proposed removal of the
ISB engages the rights to social security and to an adequate standard of
living. It notes:
[T]he right to social
security includes the right not to be subject to arbitrary and unreasonable
restrictions of existing social security coverage. Any removal of entitlements
must be justified in line with Article 4 [of the ICESCR] in the context of the
full use of the maximum available resources of the State party.[14]
1.25
The statement of compatibility further notes that this was a measure
that was to be funded from the revenue to be raised by the MRRT and that with
the removal of that tax, such measures are being removed. It maintains that the
repeal of the ISB 'is a non-arbitrary
measure that is reasonable, necessary and proportionate' in view of the modest
sum involved, the range of existing social support programs, indexation and
other factors to ensure that persons affected will continue to enjoy the right
to social security and to an adequate standard of living.[15]
1.26
The removal of the ISB may be viewed either as a limitation or
retrogressive measure. The committee accepts that the sums involved by the
removal of the ISB are relatively modest. However, its removal may nevertheless
have a detrimental effect on low-income and disadvantaged households,
particularly in light of concerns regarding the adequacy of allowance payments in
general.[16]
The committee notes that the ISB was introduced in 2012 in recognition that:
households relying on income support allowances as their main
source of income may find it difficult to manage when unanticipated expenses,
such as urgent repairs or unexpectedly large bills, arise. People in paid
employment are more likely to be able to set aside some money for such
circumstances, while allowance recipients may not be able to do so.[17]
1.27
The committee notes the statement of compatibility asserts that the
package of existing payments and assistance available to individuals and
families will be adequate to meet their needs, consistent with requirements
under articles 9 and 11 of the ICESCR. The statement of compatibility, however,
does not explain the evidence on which that assessment is made.
1.28
The committee's usual expectation where a limitation on a right is
proposed is that the statement of compatibility provide an assessment of
whether the limitation is reasonable, necessary, and proportionate to achieving
a legitimate objective.
1.29
The committee therefore seeks the Treasurer's advice as to
whether the measure to repeal the ISB is compatible with the right to social
security and the right to an adequate standard of living, and particularly:
-
whether the proposed changes are aimed at achieving a
legitimate objective;
-
whether there is a rational connection between the limitation
and that objective; and
-
whether the limitation is reasonable and proportionate measure
for the achievement of that objective.
Repeal of the Schoolkids bonus (Schedule 9)
1.30
Schedule 9 of the bill proposes to repeal
the schoolkids bonus payment.[18]
The schoolkids bonus is an indexed family assistance payment that is available
to eligible families and people in certain other categories.[19]
1.31
The statement of compatibility notes that the repeal of the schoolkids
bonus engages the rights to social security and to an adequate standard of
living. It also notes that such rights may be limited in accordance with
article 4 of the ICESCR.
1.32
The statement of compatibility argues that these rights are ensured
through the system of family
assistance and income and veterans’ support payments which have the primary purpose of meeting the costs associated with raising a child. It notes that the schoolkids bonus ‘is a
supplementary payment designed to
provide additional assistance for
education expenses’ and that the bill ‘does not affect an individual's or child's
right or access to family tax benefit or income support and veterans’ payments.’[20]
1.33
The reduction in the payment of the schoolkids bonus may be viewed
either as a limitation or retrogressive measure.
1.34
The committee's usual expectation where a limitation on a right is
proposed is that the statement of compatibility provide an assessment of
whether the limitation is reasonable, necessary, and proportionate to achieving
a legitimate objective.
1.35
The committee therefore seeks the Treasurer's advice as to
whether the measure to repeal the schoolkids bonus payment is compatible with
the right to social security and the right to an adequate standard of living,
and particularly:
-
whether the proposed changes are aimed at achieving a
legitimate objective;
-
whether there is a rational connection between the limitation
and that objective; and
-
whether the limitation is reasonable and proportionate measure
for the achievement of that objective.
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