Wednesday, 5 March 2014
Governor-General Amendment (Salary) Bill 2014, Tax and Superannuation Laws Amendment (2014 Measures No. 1) Bill 2014, Tertiary Education Quality and Standards Agency Amendment Bill 2014; Second Reading
That these bills be now read a second time.
I seek leave to have the second reading speeches incorporated in Hansard.
The speeches read as follows—
GOVERNOR-GENERAL AMENDMENT (SALARY) BILL 2014
The Governor-General is appointed by Her Majesty The Queen on the advice and recommendation of the Prime Minister and under the provisions of the Letters Patent relating to the Office. On 28 January 2014, the Prime Minister announced that The Queen had approved his recommendation to appoint General Peter Cosgrove AC MC as our next Governor-General following the retirement of Her Excellency the Honourable Quentin Bryce AC CVO.
General Cosgrove will be sworn in as Governor-General on 28 March 2014. Section 3 of the Constitution prevents the Governor-General's salary from being altered during his term of office. As such, the salary must be set prior to the appointment of General Cosgrove as Governor-General on 28 March.
Although the Governor-General serves at The Queen's pleasure, it is usual to serve for approximately five years. As such, it is necessary to set the next Governor-General's salary at a level appropriate for the duration of this term.
It has been long-standing practice to set the Governor-General's salary with reference to that of the Chief Justice of the High Court. The proposed salary is based on a forecast of the Chief Justice's salary over the next five years using wages growth projections. I note that the Chief Justice's salary is determined annually by the Remuneration Tribunal, a body that is independent of government.
In setting an appropriate salary, the Governor-General Designate requested that regard be given to the Commonwealth-funded military pension he will be entitled to receive during his term in office. This is consistent with precedent established by Sir William Deane in 1995 and continued most recently for Her Excellency, Ms Bryce, in 2008.
The proposed salary of $425,000 per annum therefore takes account of General Cosgrove's military pension.
I commend the bill and present the explanatory memorandum.
TAX AND SUPERANNUATION LAWS AMENDMENT (2014 MEASURES NO. 1) BILL 2014
This Bill introduces legislation for a number of measures that were announced but unenacted at the time of the change in government in September last year.
Schedule 1 to the Tax and Superannuation Laws Amendment (2014 Measures No.1) Bill 2014 amends the Superannuation Industry (Supervision) Act 1993 to introduce civil and criminal penalties for promoters of schemes that have resulted, or are likely to result, in the illegal early release of superannuation benefits.
Promoters of these schemes typically take a substantial commission from the superannuation benefit that is transferred.
Currently the Commissioner of Taxation can only seek penalties for scheme promoters who are also trustees of a regulated superannuation fund. These amendments will extend sanctions to the promoters of such schemes.
Promoters of illegal early release schemes will face civil and criminal penalties including a monetary penalty of up to $340,000 (2,000 penalty units) or imprisonment of up to 5 years.
These penalties will deter people from promoting such schemes and will help to ensure Australians' superannuation savings are protected for their retirement.
Schedule 2 to the Tax and Superannuation Laws Amendment (2014 Measures No.1) Bill 2014 amends the Superannuation Industry (Supervision) Act 1993 to introduce administrative directions and penalties for contraventions relating to self managed superannuation funds.
The current powers available to the Commissioner of Taxation, the Regulator of self managed superannuation funds, to address breaches by trustees of self managed superannuation funds are limited and are generally only appropriate in cases of significant non-compliance. For example, the Commissioner may make a self managed superannuation fund non-complying for taxation purposes or disqualify a fund trustee.
To address instances of non-compliance effectively, the Commissioner needs to be able to impose sanctions that reflect the seriousness of the breach. The amendments made by this Schedule will provide the Commissioner with the power to give rectification directions, such as a direction that a trustee ensure that the fund begin complying with the relevant legislation and education directions to ensure that a trustee's knowledge of the relevant legislation comes up to the requisite standard. The amendments will also permit the regulator to impose administrative penalties on self managed superannuation fund trustees for certain contraventions of the superannuation law.
These additional tools will provide the Regulator with more flexible and cost-effective mechanisms for dealing with non-compliance with the law and will support the ongoing integrity of the SMSF sector.
Schedule 3 gives effect to a measure originally announced in the 2013-14 Budget. The Government announced it would proceed with the measure as part of the process of dealing with matters announced but unenacted at the time of the change in government last year. This schedule will phase out the net medical expenses tax offset. The net medical expenses tax offset is not refundable. It is not well targeted as people who have no tax liability receive no benefit from this offset even if they have high medical expenses.
The Government is phasing out the net medical expenses tax offset with transitional arrangements for those currently claiming the offset, to give people time to adjust. From 1 July 2013, those taxpayers who claimed the offset for the 2012-13 income year will continue to be eligible for it for the 2013-14 income year if they have eligible out-of-pocket medical expenses above the relevant thresholds.
Similarly, those who claim the offset in 2013-14 will continue to be eligible to claim it in 2014-15.
In addition, the net medical expenses tax offset will be available for taxpayers whose out-of-pocket medical expenses relate to disability aids, attendant care or aged care. For these taxpayers, the offset will remain available for these expenses until 1 July 2019.
An out-of-pocket medical expense is the cost of the medical expense incurred, minus available reimbursements. Such reimbursements can include those that are available through the Medicare Benefits Schedule, the Pharmaceutical Benefits Scheme, the Repatriation Pharmaceutical Benefits Scheme, Government aged care subsidies and private health insurance refunds.
These changes refocus health expenditure on Australia's universal Medicare arrangements including generous safety nets for people with high out-of-pocket costs. They will help improve the long-term sustainability of health related expenditure so we can continue to provide a world class health system for all Australians – not just those with a tax liability. The focus of the Commonwealth will be on getting the primary care response right — on continuing substantial support through the existing arrangements.
The Government realises that the financial impact of chronic conditions, including cancer, on those affected by the disease, their families and carers, remains a significant challenge. The Government is committed to fighting cancer, through continuing to invest in prevention, early detection and treatment and care. This includes by continuing to provide substantial support for health expenses, including through the Medicare Benefits Schedule, the Pharmaceutical Benefits Scheme and related safety nets.
The National Disability Insurance Scheme (NDIS) is expected to cover all related expenses previously covered by the net medical expenses tax offset for those eligible for a funded plan from the NDIS. The Government is committed to delivering a sustainable NDIS across Australia to support people with significant and permanent disability.
The Government recognises the importance of the aged care system and is also committed to reform in this sector to ensure that older Australians have the care they need, when they need it and wherever they need it. The Government is developing a five year agreement with the aged care sector, known as the Aged Care Sector Statement of Principles.
Schedule 4 amends the list of deductible gift recipients (DGRs) identified by name in Division 30 of the Income Tax Assessment Act 1997 (the Act). Donations made to organisations with DGR status are income tax deductible to the donor and therefore DGR status will assist the listed organisations in attracting public financial support for their activities.
Three organisations are being added to the Act, namely the National Arboretum Canberra Fund, Bali Peace Park Association Inc., and the Prince's Charities Australia Limited. One organisation, the Sir William Tyree Foundation, has changed their name and needs to be relisted in the Act.
Full details of the Bill are contained in the explanatory memorandum.
TERTIARY EDUCATION QUALITY AND STANDARDS AGENCY AMENDMENT BILL 2014
Reducing red tape and enhancing quality in higher education are key priorities for the Government. The Government has committed to deliberate action to remove red tape and is determined to implement an appropriate deregulatory agenda to ensure that higher education institutions have more time and resources to devote to doing what they do best – that is delivering the highest quality teaching, learning and research.
To support higher education institutions to focus their energies and resources on their core business, the Government committed to implementing the recommendations from the independent Review of Higher Education Regulation (the Review). The Tertiary Education Quality and Standards Agency Amendment Bill 2014 (the Bill) will give effect to key recommendations contained in the Review.
The Bill will deliver measures to improve the efficiency of the Tertiary Education Quality and Standards Agency (TEQSA) and reduce the regulatory burden on higher education institutions. The measures will enable TEQSA to focus on its core functions of provider registration and course accreditation and the development of more efficient processes around these functions.
To support TEQSA's focus on its core functions, the Bill will remove TEQSA's quality assessment function which allowed the agency to conduct sector-wide thematic reviews of institutions or courses of study. Such reviews are time and resource-intensive, of TEQSA itself but also of the higher education institutions which are asked to provide input to the reviews. They do not relate directly to TEQSA's core responsibilities to register providers and accredit courses. Broader issues around quality in higher education and risks to quality are better supported through the constructive engagement with, and initiatives of, institutions themselves.
The Bill will enhance TEQSA's capacity to delegate its functions and powers to appropriate level staff within the organisation. This will support swifter decision making and faster turnaround of provider applications. This amendment will also assist to ensure that applicants seeking to appeal a TEQSA decision can access TEQSA's internal review mechanisms rather than as a first step having to seek review through the Administrative Appeals Tribunal.
The Bill will enable TEQSA to extend the period of registration and accreditation in particular cases, on its own initiative, thus improving TEQSA's ability to take a more flexible approach to managing the registration and accreditation processes. For example, in cases where institutions have multiple course accreditations with different end dates or which do not align with the period of registration, or where they are registered under both the TEQSA Act and the Education Services for Overseas Students Act, TEQSA would be able to adjust the period of accreditation or registration to achieve better alignment. This will make the processes much more efficient for higher education institutions.
In line with TEQSA's refined functions, the amendments will provide the Minister with the flexibility to appoint fewer Commissioners, remove the requirement to appoint full-time and part-time Commissioners, and separate the roles and responsibilities of the Chief Commissioner and the Chief Executive Officer. To enable effect to be given to these amendments, the Bill will curtail the terms of the incumbent Commissioners, allowing the Minister the flexibility to better determine the number of Commissioners required to support TEQSA's renewed focus on its core activities.
The Bill enhances the Minister's ability to give a general direction to TEQSA in relation to the performance of its functions and the exercise of its powers and a specific direction in regards to the fees that TEQSA charges for its services.
Finally, the Bill provides for a number of technical amendments, suggested by TEQSA, to improve the efficiency of the notification requirements.
That these bills be listed on the Notice Paper as separate orders of the day.
Question agreed to.