Nick Sherry (Tasmania, Australian Labor Party, Minister Assisting the Minister for Tourism) Share this | Link to this | Hansard source

I indicate to the Senate that these bills are being introduced together. After debate on the motion for the second reading has been adjourned, I will be moving a motion to have the bills listed on the Notice Paperas indicated on today's Order of Business. I move:

That these bills may proceed without formalities, may be taken together and be now read a first time.

Question agreed to.

Bills read a first time.

Second R eading

I table a revised explanatory memorandum relating to the Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (Further Election Commitments and Other Measures) Bill 2011 and move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

The Governance of Australian Government Superannuation Schemes Bill 2011 (the Bill) is part of a package of Bills to improve and modernise the governance arrangements for the main Commonwealth civilian and military superannuation schemes.

The Bill gives effect to the Government’s announcement, in October 2008, to merge the trustees for the Commonwealth’s main civilian and military superannuation schemes – that is, the Australian Reward Investment Alliance, the Military Superannuation and Benefits Board and the Defence Force Retirement and Death Benefits Authority (DFRDB Authority) - to form a single trustee body.

The main civilian and military superannuation schemes that will come under the single trustee are the:

The single trustee will also assume responsibility for the scheme established by the Superannuation Act 1922, the Papua New Guinea Scheme and the Defence Force (Super­annuation)(Productivity Benefit) Scheme. These schemes currently come under the Commissioner for Superannuation and, in the case of the latter scheme, the DFRDB Authority and the Commissioner for Superannuation.

The Bill establishes the Commonwealth Super­annuation Corporation (CSC) as the single trustee. CSC is a Commonwealth authority for the purposes of the Commonwealth Authorities and Companies Act 1997.

Importantly, the Bill does not impact on the design of the schemes or on members’ entitlements, which are protected by separate scheme legislation that cannot be changed by the trustee. In particular, there is no change to the existing features and benefits that reflect the unique nature of military service in the Australian Defence Force, such as death and disability arrangements.

The Government’s decision to merge the civilian and military trustees was made with the aim of improving member benefits and service levels.

The ability of a single trustee to consolidate scheme funds will provide the opportunity to access increased benefits of scale. This includes access to higher service levels and better investment opportunities, which will allow members of all the schemes to benefit through lower investment costs and higher investment returns.

Members of the Military Superannuation and Benefits Scheme (MSBS) – which comprises the bulk of serving Defence Force personnel – stand to gain substantial benefits from the merger. Shis is because the scheme has just over $3 billion in assets under management whereas the civilian schemes have approximately $18 billion in assets under management. There is clear industry experience that members of smaller superannuation schemes have the most to gain when their scheme funds are consolidated into a larger pool of funds.

All scheme members will also ultimately benefit from a highly skilled and innovative trustee being responsible for their superannuation schemes. This includes the ability for the single trustee, due to its increased presence in the superannuation industry, to attract and retain quality and experienced board members and staff.

Since last year, the Government has under­taken consultation with military stakeholders on how the Bill will affect members of the military schemes. While recognising that members of the MSBS in particular will benefit from the trustee consolidation, the Government has also accepted many of the suggestions made by the ex service community to protect the status of military superannuation. This includes a requirement for CSC to have regard to the unique nature of military service as set out in the relevant military superannuation legislation when it is performing a function under that legislation. I thank the ex-service community for their dedication to representing the interests of their members.

Both military and civilian interests will be represented on the 11 member governing board of CSC. The Chief of the Defence Force will be responsible for nominating two member directors and there will be consultation between the Finance and Defence Ministers on suitable candidates for the five employer director positions. Three other member directors are nominated by the President of the ACTU.

The Government has also responded to suggestions that there be a review of the first five years of the operation of the Act. This will ensure the ongoing effectiveness of the single trustee arrangements.

Overall, the Bill will better secure the superannuation arrangements for military personnel and Commonwealth civilian employees for the long term. It will also allow substantial benefits to flow to members, while retaining the individual scheme benefits and entitlements.

The Bill reflects the Government’s ongoing commitment to provide efficient and sustainable superannuation arrangements for Commonwealth employees and military personnel, together with its strong commitment to protect those features of military superannuation that recognise that military service is unique and different from civilian employment.

The ComSuper Bill 2011 (the Bill) is part of a package of bills to improve and modernise the governance arrangements for the main Commonwealth civilian and military super­annuation schemes.

This Bill will establish ComSuper and provide that it is a statutory agency for the purposes of the Public Service Act 1999 consisting of a Chief Executive Officer (CEO), as head of the agency, and staff. The Bill will also provide that ComSuper will be a prescribed agency for the purposes of the Financial Management and Accountability Act 1997.

The Bill will modernise the governance structure of ComSuper as a statutory agency, and clarify ComSuper’s functions. The Government’s decision to improve superannuation administra­tion was made with the aim of improving service levels for current and former members.

The function of the CEO will be to provide administrative services to the Commonwealth Superannuation Corporation (CSC), which will be established as the trustee of the main Australian Government civilian and military superannuation schemes from 1 July 2011 by the Governance of Australian Government Superannuation Schemes Bill 2011. The CEO will be responsible for providing administrative services to CSC.

The CEO will be appointed by the Minister for Finance and Deregulation in consultation with the Minister for Defence.

Overall, the implementation of the Bill will better secure the superannuation arrangements for Commonwealth civilian employees and military personnel for the long term. The Bill reflects the Government’s ongoing commitment to provide efficient and sustainable superannuation arrangements for Commonwealth employees and military personnel.

The Superannuation Legislation (Consequential Amendments and Transitional Provisions) Bill 2011 (the Bill) supports signifi­cant reforms to the governance of Commonwealth superannuation that are included in the Governance of Australian Government Superannuation Schemes Bill 2011 and the ComSuper Bill 2011.

The Bill makes consequential amendments to a range of other Commonwealth Acts of Parliament to take account of the changes to governance arrangements for Commonwealth superannuation schemes. It also puts in place transitional arrange­ments necessary for the reforms.

The Bill amends the Superannuation Act 2005 to facilitate public sector employees being able to consolidate their superannuation savings under the management of one trustee.

Following consultation with ex-service organisations, the Government has strengthened recognition of the unique nature of military service in the Bill. In particular, the Bill amends the Defence Force Retirement and Death Benefits Act 1973 to mandate the establishment of a dedicated Defence Force Case Assessment Panel by the single trustee, Commonwealth Super­annuation Corporation. The establishment of the Panel ensures the continuation of the role and function currently performed by the Defence Force Retirement and Death Benefits Authority within the framework of the single trustee.

The Bill requires the Panel to have military representation. This includes representation nominated by the Chiefs of each of the three services. The Bill also prescribes the Chair as being one of the directors of CSC who was nominated by the Chief of the Defence Force.

This Bill is one of a number of Bills that together introduce fuel tax reforms first announced by the former Howard Government in its 2003-04 Budget.

The Bills phase in the new taxation arrangements in respect of liquefied petroleum gas, liquefied natural gas and compressed natural gas. The Bills also clarify the tax treatment of renewable fuels, namely ethanol, methanol and biodiesel, and correct a legislative anomaly that was wilfully ignored by the former Howard Government, providing much needed certainty for the renewable fuels industry.

Over time, the rate of excise applied to LPG, LNG and CNG will be calculated on the basis of the energy content of those fuels, discounted by 50 per cent to recognise the fuel security, potential environmental, and regional develop­ment benefits arising from their use. These arrangements will be phased in incrementally over a five year period to ensure that industry and users of the fuels have sufficient time to adjust to the new system.

According to the ACCC's December 2010 report on the petroleum industry, Australia enjoyed the lowest automotive LPG prices in the OECD. The introduction of taxation on LPG will bring Australia into line with most other OECD countries.

This Bill also includes a commitment that renewable fuels (ethanol, methanol and biodiesel) do not pay effective excise. This commitment reflects discussions with our cross-bench colleagues and industry on these longstanding reforms. It will mean that these renewable fuels will play an important part in Australia's transition to a low carbon economy and future energy security.

The taxation and grant arrangements that currently apply to ethanol, namely application of fuel taxation to both imported and domestically produced ethanol with a grant for domestically produced ethanol, will be maintained for a period of 10 years before a review is undertaken. Similarly, the taxation arrangements for biodiesel and renewable diesel, and the availability of the Energy (Cleaner Fuels) Scheme Grants, will remain in place before a review is undertaken after 10 years.

The Government will also exclude methanol, used in certain racing vehicles, from the new regime because of its limited use and small market. This recognises the concerns of the industry.

While the Government has not made any final decisions about the treatment of fuel in the carbon price arrangements, a principle of carbon pricing is to apply a price that reflects the relative emissions of different activities.

The Government notes the claims of the LPG industry that LPG generates 13 per cent less emissions than regular petrol and the low carbon opportunities of ethanol, methanol, biodiesel and other alternative fuels. The Government is committed to addressing the relative emissions generated by those fuels as part of its consideration of arrangements for fuel under the carbon price.

The support of the Parliament for this legislation is crucial.

Under the former Government's legislation that will apply unless new legislative arrangements are made, the taxation arrangements for both imported and domestically produced ethanol will both jump to 7.6 cents per litre from 1 July 2011. This will mean that on this date the net excise on domestic ethanol will rise by 7.6 cents per litre and the duty on imported ethanol will fall by more than 30 cents per litre. In addition, the tax on imported and domestic ethanol will continue to rise each year by more than 7.6 cents per litre until they are both taxed at the petrol rate of 38.143 cents per litre. Biodiesel will also be overtaxed from 1 July 2011 if the Bills are not passed. The consequences of these arrangements would be devastating for industry.

The Gillard Government is committed to completing the unfinished business of the Howard Government and to acting in the national interest. It is imperative to have these Bills passed to avoid the unintended tax consequences on the ethanol and biodiesel industries.

Once enacted, the legislation will provide certainty for alternative fuels taxation so that industry will be able to make decisions, confident in the knowledge of the tax arrangements that apply.

This is in stark contrast to the position of the Liberal-National Coalition.

In May 2003 the then Treasurer Costello announced the alternative fuels tax arrangements as long-term, important reforms—saying Australia must have a more consistent and sustainable fuel tax regime.

In December 2003 the then Prime Minster Howard said the reforms will result in a more consistent and neutral tax regime for fuels used in vehicles. The Deputy Prime Minister John Anderson at the time emphasised the importance of investment certainty.

This stance was reaffirmed by the Coalition as recently as the 2010 federal election campaign. But after eight years of being Coalition policy, on 28 January this year, the Leader of the Nationals made it clear that the Opposition now opposed these once bipartisan fuel tax reform arrange­ments. This is despite the fact that the Coalition was happy to include the positive revenue implications of this policy in the budget forward estimates from the time the policy was first announced.

In the face of this opportunistic policy reversal by the Coalition, the Government is getting on with the job, mindful of the new paradigm, but determined to act in the national interest.

It is critical that the Bills are considered promptly in the Parliament. Royal Assent is necessary before 1 July 2011 to prevent the changes legislated for ethanol, biodiesel and renewable diesel by the Howard Government coming into operation on 1 July 2011. These changes would seriously undermine Australia's renewable fuels manufacturing industry.

These Bills have been developed following an extensive consultation process with industry that included the release for comment of a discussion paper and release of exposure draft legislation.

The Bills also give effect to the Government's decision announced on 24 January 2011 at a cost of $26 million, to defer the start date of the new taxation arrangements for alternative fuels until 1 December 2011. This decision reflects the Government's commitment to listen and respond to concerns raised by industry and provides additional time, particularly for the gaseous fuels industry, to prepare for the changes.

The new tax arrangements contained in the Bills that apply to the taxation of LPG have been developed in close consultation with the LPG industry to ensure that industry compliance costs are minimised to the greatest extent possible.

These Bills also address industry concerns about the fuel tax credit arrangements applying to alternative fuels when blended with other fuels. The Bills set out rules to work out fuel tax credit entitlements for blends of fuels and ensures that current arrangements are maintained.

The application of fuel tax to alternative fuels by the package of Bills recognises that ethanol, biodiesel and renewable diesel are already in the excise and customs system and generally qualify for existing grants. The Bills ensure that these current arrangements will continue with a review after ten years.

Grants currently payable under the Energy Grants (Cleaner Fuels) Scheme Act 2004 will continue to be payable from 1 July 2011. Renewable diesel and biodiesel will continue to have fuel tax applied at the full fuel tax rate of 38.143 cents per litre with cleaner fuels grants offsetting the fuel tax.

Methanol and the gaseous fuels (compressed and liquefied natural gas and liquefied petroleum gas) are not in the fuel tax system at present. Methanol will remain outside the system.

CNG, LNG and LPG will enter the fuel tax system from 1 December 2011 and be covered by new arrangements. These set duty on a net basis without applying an offsetting grant against duty payable and set the rates of fuel tax on CNG and LNG in cents per kilogram rather than on volumetric terms. These changes were supported during consultations as industry considered that they would reduce business compliance costs.

These improvements to the former Howard Government policy reflect a Government that is willing to listen. The Gillard Government is committed to getting this policy right, and to continuing to monitor the policy settings over time.

Accordingly, the Gillard Government will review the operation of the legislation after 30 June 2015 as it applies to LNG, CNG and LPG. At this time, a review of this longstanding policy will be timely given broader energy issues, including a carbon price. It would also be an appropriate time to analyse industry compliance costs, particularly in the LPG sector. Such a review can also consider issues such as the size of the alternative fuels sector and the market growth of these industries.

A separate later review of the taxation and grant arrangements that apply to ethanol, biodiesel, renewable diesel and methanol will be undertaken by the Government after 30 June 2021. The exclusion of methanol from duty will also be reviewed at this time.

Full details of the Taxation of Alternative Fuels Legislation Amendment Bill 2011 are contained in the combined explanatory memorandum.

The Bill is part of a package of Bills concerning the taxation of alternative fuels. The Bill provides for excise to be applied to certain fuels manufactured or produced in Australia.

The Bill sets out the excise rates that will apply at each stage of phasing in the new alternative fuels tax regime for compressed and liquefied natural gas and liquefied petroleum gas, and sets out how blends of fuels in the fuels tax system should be handled to determine excise duty obligations.

Full details of the Excise Tariff Amendment (Taxation of Alternative Fuels) Bill 2011 are contained in the explanatory memorandum.

The Customs Tariff Amendment (Taxation of Alternative Fuels) Bill 2011 is one of the package of five related Bills which impose rates of duty on alternative fuels, biodiesel, renewable diesel, ethanol, methanol and gaseous fuels.

The Customs Tariff Amendment (Taxation of Alternative Fuels) Bill 2011 will amend the Customs Tariff Act 1995.

These amendments impose customs duty on those tariff subheadings in the Customs Tariff Act that apply to alternative fuels. The Bill creates new subheadings to specify those products and also certain blends containing ethanol and biodiesel.

The new rates of customs duty will apply to alternative fuels imported from all countries, including alternative fuels imported under Australia’s Free Trade Agreements.

These amendments will ensure that the rates of customs duty on imported alternative fuels are the same as the rates of excise duty on those goods when produced in Australia.

The amendments to the Customs Tariff Act will take effect from 1 December 2011.

The Bill is part of a package of Bills concerning the taxation of alternative fuels. The Bill amends the Energy Grants (Cleaner Fuels) Scheme Act 2004 to extend its operation.

The change is a consequence of two circumstances. First, the Government’s decision announced on 24 January 2011 to allow an additional five months until 1 December 2011 for affected industry participants and, in particular, the gaseous fuels sector to adjust to the changes. Second, as a result of revised fuel taxation arrangements for ethanol, biodiesel, renewable diesel and methanol.

Full details of the Energy Grants (Cleaner Fuels) Scheme Amendment Bill 2011 are contained in the explanatory memorandum.

Debate adjourned.

Ordered that the bills be listed on the Notice Paper as orders of the day as indicated at item 8(b) of today's Order of Business.