Greg Combet (Charlton, Australian Labor Party, Minister Assisting the Minister for Climate Change) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

The Carbon Pollution Reduction Scheme (Consequential Amendments) Bill 2010 contains consequential and transitional provisions relating to the Carbon Pollution Reduction Scheme.

The bill seeks to amend 12 acts and one set of regulations.

The most significant amendments relate to the National Greenhouse and Energy Reporting Act 2007.

That act provides the existing national framework for the reporting of information on greenhouse gas emissions, energy consumption and energy production. To maintain the government’s commitment to the streamlining of reporting of greenhouse and energy data, the act will be the starting framework for monitoring, reporting and assurance under the Carbon Pollution Reduction Scheme.

A number of changes are proposed to strengthen the act and align it with the requirements of the scheme, as outlined in the government’s white paper titled Carbon Pollution Reduction Scheme: Australia’s low pollution future, which was released on 15 December 2008. Under the amendments, one report will satisfy an entity’s reporting requirements for the scheme and current reporting requirements under the National Greenhouse and Energy Reporting Act 2007.

The Carbon Pollution Reduction Scheme also covers synthetic greenhouse gases. As some of these gases are already regulated under the Ozone Protection and Synthetic Greenhouse Gas Management Act 1989, amendments will also be made to that act to align it with the scheme.

The bill also contains a number of consequential amendments relating to the establishment of the Australian Climate Change Regulatory Authority.

As well as administering the Carbon Pollution Reduction Scheme, the new authority will take over administration of both greenhouse and energy reporting and the renewable energy target. This necessitates a number of legislative amendments to replace two existing statutory bodies—the Office of the Renewable Energy Regulator and the Greenhouse and Energy Data Officer—and transfer their functions to the new authority.

The creation of the Australian Climate Change Regulatory Authority also gives rise to a number of other consequential amendments—for example, to apply financial management and accountability requirements to the authority.

Australian emissions units and eligible international emissions units are also to be financial products for the purposes of chapter 7 of the Corporations Act 2001 and division 2, part 2 of the Australian Securities and Investments Commission Act 2001. The bill amends these acts accordingly.

These amendments will provide a strong regulatory regime to reduce the risk of market manipulation and misconduct relating to emissions units. Appropriate adjustments to the regime to fit the characteristics of units and avoid unnecessary compliance costs will be made through regulations. The government has consulted on those regulations, which will be made shortly after passage and apply from commencement of this legislation.

As required by the Corporations Agreement between the Commonwealth, states and territories, the Ministerial Council for Corporations has been consulted about the amendments to the corporations legislation and, to the extent necessary, has approved those amendments.

Schedule 2 of this bill amends various taxation laws to clarify the income tax and goods and services tax treatment of emissions units.

The main consideration in designing the tax treatment of units is that the tax treatment should not compromise the main objectives of the scheme. This means that tax should not influence decisions between purchasing, trading and surrendering units or alternatively reducing emissions. The preferred tax treatment will help implement the scheme and reduce compliance and administration costs for taxpayers and the Australian government.

For income tax, the amendments establish a rolling balance treatment of registered emissions units which is similar to that for trading stock. The result of the treatment is that the cost of a unit is deductible, with the effect of the deduction generally being deferred through the rolling balance until the sale or surrender of the unit.

The proceeds of selling a unit are assessable income with any difference in the value of units held at the beginning of an income year and at the end of that year being reflected in taxable income. Any increase in value is included in assessable income and any decrease in value allowed as a deduction.

The bill also amends the goods and services tax law. It characterises a supply of an eligible emissions unit or a Kyoto unit as a supply of personal property right and not a supply of or directly connected with real property. The amendments will promote certainty about the application of the normal GST rules to scheme transactions.

The consequential amendments contained in this bill are important for the efficient and effective operation of the CPRS. The amendments seek, where possible, to streamline institutional and regulatory arrangements and minimise administrative costs with the scheme.

I commend the bill to the House.

Debate (on motion by Dr Southcott) adjourned.