Nick Xenophon (SA, Independent) Share this | Hansard source

I would like to ask some general questions. I did not get a chance last night and I have not had a chance earlier today. I want to put a number of questions on notice for the minister so that they can be dealt with in due course by Treasury officials and officials of her department. Before I do that, I say that last night I asked a number of questions in relation to household assistance and the government responded to that earlier today. Rather than reading it out, I seek leave to have the document incorporated in Hansard. I am happy to provide copies to my colleagues.

Leave granted.

The document read as follows—

CPRS household assistance

Overview

The Government is committed to helping households with the impact the CPRS. It has designed an assistance package for low- and middle-income households that calibrates almost all support to the expected carbon price impact of the scheme.

The Government will modify the level of household assistance to reflect the lower carbon price estimate of $26 per tonne in 2012-13 (included in the 2009-10 MYEFO). The estimated 2012-13 carbon price forecast at MYEFO ($26) is lower than forecast at Budget ($29) due to the appreciation of the Australian dollar.

• This will reduce expected price increases for goods and services and lead to a smaller rise in the overall cost of living impact of the CPRS.

This scaling results in the Government delivering on its commitment to support low- and middle-income households (at the lower carbon price) once the flexible carbon price commences from 2012-13.

Modifying the level of household assistance has also required some minor revisions to the structure of household assistance to ensure all low-income household continue to be fully assisted from 2012-13.

Revision to the FTB combined supplement

A special end-of-year supplement—the FTB combined supplement —is to be established for households receiving both Family Tax Benefit (FTB) Part A and Part B where the income of the primary earner exceeds $58,000 (but the combined income of a couple is less than the cut-out for FTB Part A).

The special end-of-year FTB combined supplement is designed to overcome the disadvantage that certain families with only one primary earner —on incomes over around $70,000 and receiving little or no benefit from the Low Income Tax Offset (LITO) increase —experience when compared to dual income families at the same income level where both earners could be receiving the LITO increase.

The special end-of-year FTB combined supplement shades in at a rate of 4 cents in the dollar until the maximum amount is reached.

• The supplement shades in on the adjusted taxable income of the primary earner above $58,000.
• The maximum rate is $240 per family for 2011-12 and $620 for 2012-13 and beyond.

These amounts are not indexed.

The special end-of-year FTB combined supplement ceases when the family is no longer eligible for FTB Part A (family incomes exceeding around $110,000, but this depends on the number and age of children in the family).

The special end-of-year FTB combined supplement is paid at the same time as the existing end-of-year supplement for FTB Part B at the end of the financial year.

The proposed package will still deliver the Government’s commitment to support low- and middle-income households (at the lower carbon price) once the Scheme moves to a flexible carbon price from 2012-13, and has the benefit of calibrating almost all industry and households support to the expected impacts of the actual carbon price.

I have given copies to all colleagues of a document from Frontier Economics entitled ‘Fiscal effects of “revised offer” CPRS’ that I received today. I seek leave to table that document.

Leave granted.

I wish to put a number of questions on notice. In relation to funding the package, my questions follow on from several asked last night by Senator Milne and are around the theme of how the proposed package will be paid for. Effectively, funding for household measures has been reduced by $5.76 billion to 2019-20 because of a projected lower carbon price due to an appreciated Australian dollar. Firstly, how is performance of the Australian dollar over the next 10 years projected? Secondly, what data was used and what modelling methodology was carried out? Thirdly, given the volatility of the Australian dollar over the last decade, what confidence does the government have that its projections will prove reliable over the next decade? Fourthly, will the government continue to adjust household assistance in future when the exchange rate adjusts? Fifthly, will it increase assistance if the exchange rate falls?

Further, in the MYEFO the government originally revised its exchange rate assumption but did not reduce household assistance. This resulted in a budget deficit. Can the government confirm that it cannot fund increased assistance from this amount without further increasing the deficit from the MYEFO? Should the Australian dollar decline sharply at some point in coming years, what contingency plan does the government have in place? The government’s offer to the coalition is partly funded from a contingency reserve allocation for the CPRS. How much has been set aside from this fund and does it contradict the claim that the CPRS will be fully self-funded?

In relation to electricity prices and household assistance, can the government confirm that it expects retail electricity prices to rise by up to 12 per cent by 2012-13? In Australia’s low pollution future at page 189, it forecasts that electricity will rise by 17 to 24 per cent and gas by 11 to 15 per cent. In the media release of 25 November this year, the forecasts were between seven and 12 per cent for electricity increases and four to seven per cent for gas. Could I get some clarification in relation to that? Have I got it wrong? If there is a difference in comparing like for like, why is there that difference? If electricity price rises due to the CPRS are greater than 12 per cent, will the government guarantee that they will fully compensate families for these extra costs? If not, how will the compensation mechanism work and will it involve cutting compensation elsewhere?

In relation to small business, under the revised CPRS proposal it would seem that medium and large business enterprises as well as corporations with electricity usage in excess of 300 megawatt hours will all be financially supported by the government during their transition to the CPRS. I note the concerns of the Australian Chamber of Commerce and Industry in their media release of 25 November that:

… though … p18 of the Government announcement) allocates $1.1 billion for “SME electricity price impacts”, the Prime Minister’s statement—

appears to be in contrast, in that he—

says that this programme is for “medium to large manufacturing” and “mining businesses.”

I should correct that. I think there is a contrast between what the Prime Minister said and what the Leader of the Opposition said in that this $1.1 billion compensation is for small to medium mining and manufacturing businesses. Could I get some clarification as to the extent of that package, who it would apply to and the circumstances it would apply to—the thresholds and the like and which businesses it would actually apply to?

I have been contacted by the Council of Small Business of Australia, who have expressed concern that it appears there is support provided for households and large businesses but there is no mention made of support for small business. My questions are: how much do small and medium enterprises currently spend on electricity each year and by how much does the government expect SME businesses’ electricity costs to rise as a consequence of the CPRS? What is the total value of compensation to businesses for higher electricity prices due to the CPRS? Will SMEs be compensated for their additional electricity costs and, if so, by how much?

I have a number of questions on white certificates, which I am moving an amendment in relation to. I am happy to put those questions on notice now or later. I am just trying to be helpful here to speed things up. Perhaps I could put those questions on notice now and get them out of the way. In terms of white certificates—