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House of Representatives

Clean Energy (Household Assistance Amendments) Bill 2011

Explanatory Memorandum

Circulated By the Authority of the Minister for Families, Housing, Community Services and Indigenous Affairs, the Hon Jenny Macklin MP

OUTLINE

The 2011 Clean Energy Legislative Package

The Clean Energy (Household Assistance Amendments) Bill 2011 is part of the Clean Energy Legislative Package, which sets up the carbon pricing mechanism (the mechanism) as part of the Government's climate change plan, as set out in Securing a clean energy future: the Australian Government's climate change plan.

The full policy context and background to the mechanism is set out in the explanatory memorandum for the Clean Energy Bill 2011. A description of the Bills which will introduce the mechanism is set out below.

The Clean Energy Bill 2011 and related Bills

Main Bill The Clean Energy Bill 2011 creates the mechanism. It sets out the structure of the mechanism and process for its introduction. These include:

·
entities and emissions that are covered by the mechanism;
·
entities' obligations to surrender eligible emissions units;
·
limits on the number of eligible emissions units that will be issued;
·
the nature of carbon units;
·
the allocation of carbon units, including by auction and the issue of free units;
·
mechanisms to contain costs, including the fixed charge period and price floors and ceilings;
·
linking to other emissions trading schemes;
·
assistance for emissions-intensive trade-exposed activities and coal-fired electricity generators;
·
monitoring, investigation, enforcement and penalties;
·
administrative review of decisions; and
·
reviews of aspects of the mechanism over time.

Statutory bodies The Clean Energy Regulator Bill 2011 sets up the Regulator, which is a statutory authority that will administer the mechanism and enforce the law.
The responsibilities of the Regulator include:

·
providing education on the mechanism, particularly about the administrative arrangements of the mechanism;
·
assessing emissions data to determine each entity's liability;
·
operating the Australian National Registry of Emissions Units (the Registry);
·
monitoring, facilitating and enforcing compliance with the mechanism;
·
allocating units including freely allocated units, fixed charge units and auctioned units;
·
applying legislative rules to determine if a particular entity is eligible for assistance in the form of units to be allocated administratively, and the number of other units to be allocated;
·
administering the National Greenhouse and Energy Reporting System (NGERS), the Renewable Energy Target (RET) and the Carbon Farming Initiative (CFI); and
·
accrediting auditors for the CFI and NGERS.

The Climate Change Authority Bill 2011 sets up the Authority, which will be an independent body that provides the Government with expert advice on key aspects of the mechanism and the Government's climate change mitigation initiatives.
The Government will remain responsible for carbon pricing policy decisions.
This Bill also sets up the Land Sector Carbon and Biodiversity Board which will advise on key initiatives in the land sector.
Consequential amendments The Clean Energy (Consequential Amendments) Bill 2011 makes consequential amendments to ensure:

·
NGERS supports the mechanism;
·
the Registry covers the mechanism and the CFI;
·
the Regulator covers the mechanism, CFI, the Renewable Energy Target and NGERS;
·
the Regulator and Authority are set up as statutory agencies and regulated by public accountability and financial management rules;
·
that emissions units and their trading are covered by laws on financial services;
·
that activities related to emissions trading are covered by laws on money laundering and fraud;
·
synthetic greenhouse gases are subject to an equivalent carbon price applied through existing regulation of those substances;
·
the Regulator can work with other regulatory bodies, including the Australian Securities and Investments Commission (ASIC), the Australian Competition and Consumer Commission (ACCC) and the Australian Transaction Reporting and Analysis Centre (Austrac);
·
the taxation treatment of emissions units for the purposes of GST and income tax is clear; and
·
the Conservation Tillage Refundable Tax Offset is established.

Procedural Bills Those elements of the mechanism which oblige a person to pay money are implemented through separate Bills that comply with the requirements of section 55 of the Constitution.
These Bills are the Clean Energy (Unit Shortfall Charge-General) Bill 2011, Clean Energy (Unit Issue Charge - Fixed Charge) Bill 2011, Clean Energy (Unit Issue Charges - Auctions) Bill 2011, Clean Energy (Charges-Excise) Bill 2011, Clean Energy (Charges-Customs) Bill 2011, Clean Energy (International Unit Surrender Charge) Bill 2011, Ozone Protection and Synthetic Greenhouse Gas (Manufacture Levy) Amendment Bill 2011 and Ozone Protection and Synthetic Greenhouse Gas (Import Levy) Amendment Bill 2011.
Related Bills Other elements of the Government's Climate Change Plan are being implemented through other legislation. These are:

·
the Clean Energy (Excise Tariff Legislation Amendment) Bill 2011 and the Clean Energy (Customs Tariff Amendment) Bill 2011, which imposes an effective carbon price on aviation and non-transport gaseous fuels through excise and customs tariffs;
·
the Clean Energy (Fuel Tax Legislation Amendment) Bill 2011, which reduces the business fuel tax credit entitlement of non-exempted industries for their use of liquid and gaseous transport fuels, in order to provide an effective carbon price on business through the fuel tax system; and
·
the Clean Energy (Household Assistance Amendments) Bill 2011, Clean Energy (Tax Laws Amendments) Bill 2011 and the Clean Energy (Income Tax Rates Amendments) Bill 2011, which will implement the household assistance measures announced by the Government on 10 July 2011. These Bills amend relevant legislation to provide payment increases for pensioners, allowees and family payment recipients and provide income tax cuts and establish new supplements for low and middle-income households.

This Bill needs to be read in the context, in particular, of the Clean Energy Bill 2011.

Clean Energy (Household Assistance Amendments) Bill 2011

This Bill delivers on the Government's commitments to low and middle-income households to help Australians adjust to a low emissions economy, and assist with the cost impacts resulting from a carbon price. This household assistance will provide higher payments, equivalent to a 1.7 per cent increase, to pensioners, veterans, self-funded retirees and families. This Bill also establishes new supplements for low-income families, single income families and certain households that have significantly higher than average electricity costs due to a medical condition, ageing or disability.

Further household assistance measures made through amendments to the tax laws are introduced separately.

Date of effect and application

The provisions in this Bill apply from various dates. Generally, the clean energy advance provisions in the Bill apply from 14 May 2012, with most payments being made over the period 14 May to 30 June 2012. The clean energy supplement provisions apply from 2013 after the relevant clean energy advance period. Commencement of the whole Bill is dependent upon commencement of the new Clean Energy Act 2011.

Proposal announced

The measures are based on the Government's announcement of its Clean Energy Future Plan on 10 July 2011 as set out in Securing Australia's clean energy future: the Australian Government's climate change plan.

Financial impact statement

The financial impact statement is included in the explanatory memorandum for the Clean Energy Bill 2011.

Regulation impact statement

The Regulation Impact Statement for the mechanism, entitled Australia's plan for a clean energy future, is available at http://ris.finance.gov.au. The Regulation Impact Statement was prepared by the Department of Climate Change and Energy Efficiency and has been assessed as adequate by the Office of Best Practice Regulation.


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