Kelvin Thomson (Wills, Australian Labor Party) Share this | Hansard source

Report No. 112 of the Joint Standing Committee on Treaties reviews eight significant treaty actions: taxation information exchange agreements with Gibraltar, the Cook Islands and the States of Guernsey; agreements on the allocation of taxing rights with the Cook Islands and the States of Guernsey entered in conjunction with the taxation information exchange agreements; an exchange of letters amending the agreement between the government of Australia and the government of New Zealand concerning a joint food standards system; and new agreements on social security with the Czech Republic and the former Yugoslav Republic of Macedonia. Two minor treaty actions are also included.

The committee supports each of the actions considered in this report, and I will direct my remarks this evening to the content and purpose of the eight significant actions. I turn first to the five taxation agreements. These treaties have a common object: the elimination of harmful tax practices amongst low-taxed jurisdictions in accordance with OECD standards. We do not know the full level and type of economic activity between Australia and the Cook Islands, Gibraltar and the States of Guernsey. All three however are recognised offshore financial centres, and AUSTRAC data indicates that the flow of funds is significant.

The proposed new treaties will help Australia combat this threat to the integrity of our tax system. Three are tax information exchange agreements which essentially follow an established model format. Both parties are obliged to exchange information which is foreseeably relevant to the administration and enforcement of domestic tax laws. Where the party does not uphold the information necessary to comply with a request, it must use its relevant information-gathering powers to obtain it. The two additional taxation treaties with the Cook Islands and the States of Guernsey provide for the allocation of taxing rights in order to prevent double taxation of the same income. Australia offered these agreements to encourage entry into the information exchange arrangements. The committee understands that Gibraltar did not take up the offer.

I turn now to the exchange of letters amending the joint food standards system. This system is a cooperative bilateral arrangement involving the governments of Australia, New Zealand and the Australian states and territories. It provides the framework for the timely development and review of food standards appropriate to both countries. Draft standards and amendments become part of the legally enforceable Food Standards Code following consideration and endorsement by the ministerial council, a deliberative body comprising relevant ministers from all jurisdictions.

The exchange of letters will amend aspects of this process to give effect to the recommendations of a 2007 report. It will remove the ministerial council’s power to call for a second review of a draft standard or amendment. It will also remove the automatic requirement for the council to seek review at one jurisdiction’s request. Two further changes will affect the adoption of standards in exceptional or emergency situations. A single exceptional circumstances mechanism will apply to both parties, enabling separate standards to be created only in response to specific risks. The exchange of letters will also create additional obligations for jurisdictions adopting temporary standards, where there is not sufficient time for the normal drafting process to take place. The committee supports these measures to improve the efficiency of the system, notwithstanding the fact that another review into food-labelling law and policy is currently underway. The committee has been assured that the present measures will not undermine the outcome of that review.

I turn finally to the new bilateral agreements on social security with the Czech Republic and the Former Yugoslav Republic of Macedonia. These treaties add to the 23 bilateral social security agreements Australia has already ratified. Agreements of this nature assist Australian residents to access certain social security payments which they are entitled to receive from another country. Specifically, the treaties covered in this report will cover the Australian age pension; and the Czech and Macedonian age, disability and survivor’s pensions.

Once the treaties enter into force, people living in one country will be able to lodge a claim for a pension with the other country. Restrictions on the portability of payments will be removed; and avenues for mutual assistance will be provided to help ensure people are paid their correct entitlements.

The committee is conscious that these agreements impose an administrative cost on Australia which will not be fully offset by the reduction in the cost of age pensions. This is due in part to the small number of persons eligible under the agreements.

In noting that these numbers are small, the committee has not lost sight of the fact that the improvement in the pension incomes of eligible Australians will be significant. The committee accepts that the social benefit to be realised in this instance outweighs the net cost to Australia.

In concluding my remarks this evening, I thank the numerous agencies, individuals and organisations who assisted in the committee’s inquiries, and I commend the report to the House.

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