2002-03 BUDGET PAPER No. 2

BUDGET MEASURES
2002-03

CIRCULATED BY
THE HONOURABLE PETER COSTELLO, M.P.,
TREASURER OF THE COMMONWEALTH OF AUSTRALIA, AND
SENATOR THE HONOURABLE NICK MINCHIN,
MINISTER FOR FINANCE AND ADMINISTRATION,
FOR THE INFORMATION OF HONOURABLE MEMBERS
ON THE OCCASION OF THE BUDGET 2002-03
14 MAY 2002

  Commonwealth of Australia 2002
ISBN 0642 74106 9
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Foreword
Budget Paper No. 2   Budget Measures 2002-03 ensures that the Budget Papers provide comprehensive information on all Government decisions announced in the Budget that involve changes to its revenue, expense and investing activities.
Budget Paper No. 2 comprises three parts:
•	Part I:	Revenue Measures
•	Part II:	Expense Measures
•	Part III:	Capital Measures
Revenue measures are defined as those measures that affect taxation or non-taxation revenues (on a Government Finance Statistics (GFS) basis).
Expense measures are defined as those measures that affect expenses (on a GFS basis).
Capital measures are defined as those measures that affect net capital investment, defined as the change in non-financial assets. Capital measures that fall outside of this definition, such as equity injections or loans used for purposes other than investment in non-financial assets, are shown as having a zero impact on the fiscal balance.
A summary of all measures introduced since the 2001-02 Budget is included in each part. Measures introduced since the 2001-02 Mid-Year Economic and Fiscal Outlook (MYEFO), including measures in this Budget, are described in detail. Detailed descriptions of measures up to the time of the MYEFO are contained in that document.

Notes
(a)	The following definitions are used in this Budget Paper:
•	‘real’ means adjusted for the effect of inflation;
•	real growth in expenses is measured by the non‑farm Gross Domestic Product deflator;
•	Budget year refers to 2002‑03, while the forward years refer to 2003‑04, 2004‑05 and 2005‑06; and
•	one billion is equal to one thousand million.
(b)	Figures in tables and generally in the text have been rounded. Discrepancies in tables between totals and sums of components are due to rounding:
•	estimates under $100,000 are rounded to the nearest thousand;
•	estimates $100,000 and over are generally rounded to the nearest tenth of a million;
•	estimates midway between rounding points are rounded up; and
•	the percentage changes in statistical tables are calculated using unrounded data.
(c)	For the budget balance, a negative sign indicates a deficit while no sign indicates a surplus. 
(d)	The following notations are used:
*	The nature of this measure is such that a reliable estimate cannot be provided.
NEC/nec	not elsewhere classified
AEST	Australian Eastern Standard Time
-	nil
..	not zero, but rounded to zero
na	not applicable (unless otherwise specified)
nfp	not for publication
$m	$ million

(e)	References to the ‘States’ or ‘each State’ include the Territories, because from 1993‑94 onwards, general purpose funding has been on the same basis for all jurisdictions. The Australian Capital Territory and the Northern Territory are referred to as ‘the Territories’. The following abbreviations are used for the names of the States, where appropriate:
NSW	New South Wales
VIC/Vic	Victoria
QLD/Qld	Queensland
WA	Western Australia
SA	South Australia
TAS/Tas	Tasmania
ACT	Australian Capital Territory
NT	Northern Territory
Budget Measures 2002‑03 is one of a series of Budget Papers, the purpose of which is to provide information supplementary to that in the Budget Speech. A full list of the series is printed on the inside cover of this paper.

Contents
Part I:  Revenue measures	1
Communications, Information Technology and the Arts	6
Education, Science and Training	6
Foreign Affairs and Trade	7
Immigration and Multicultural and Indigenous Affairs	8
Transport and Regional Services	10
Treasury	11
Part II:  Expense measures	31
Agriculture, Fisheries and Forestry	48
Attorney‑General’s	54
Communications, Information Technology and the Arts	71
Defence	78
Education, Science and Training	83
Employment and Workplace Relations	89
Environment and Heritage	91
Family and Community Services	93
Finance and Administration	104
Foreign Affairs and Trade	105
Health and Ageing	107
Immigration and Multicultural and Indigenous Affairs	126
Industry, Tourism and Resources	143
Prime Minister and Cabinet	152
Transport and Regional Services	153
Treasury	158
Veterans’ Affairs	170
Part III:  Capital measures	173
Attorney‑General’s	177
Communications, Information Technology and the Arts	183
Defence	184
Education, Science and Training	186
Employment and Workplace Relations	187
Finance and Administration	188
Immigration and Multicultural and Indigenous Affairs	189
Transport and Regional Services	190
Treasury	190
Cross Portfolio	191

Table of Measures by Portfolio
Part 1:  Revenue measures
Communications, Information Technology and the Arts
Changes to the Regional Equalisation Plan rebates	6
Education, Science and Training
Extension of the Postgraduate Education Loans Scheme	6
Foreign Affairs and Trade
Increase in the price of the Australian passport	7
New senior Australian passport	7
Immigration and Multicultural and Indigenous Affairs
Align the onshore and offshore Visa Application Charge for skilled points tested migration	8
Align the Resident Return Visa application charge with the Australian citizenship application fee	8
Increase in the permanent migrant intake	9
Second instalment Visa Application Charge for the Adult Australian Migrant English Programme for onshore applicants for permanent residence	9
Transport and Regional Services
Aviation war risk insurance — indemnities for Australian carriers, airports and service providers	10
Treasury
Income tax
12 month extension of the grouping rules	11
A Better Superannuation System — allow temporary residents to access their superannuation after they have departed Australia	11
A Better Superannuation System — continuing superannuation contributions to age 75	12
A Better Superannuation System — higher fully deductible amount for superannuation contributions by self‑employed persons	13
A Better Superannuation System — quarterly Superannuation Guarantee contributions	13
A Better Superannuation System — reducing the Superannuation Surcharge rate	14
A Better Superannuation System — reduction of the tax rate on excessive Eligible Termination Payments	14
A Better Superannuation System — replacement of the rebate for personal superannuation contributions	15
A Better Superannuation System — splitting of superannuation contributions between couples	15
A Better Superannuation System — superannuation for life:  child accounts	16
A Better Superannuation System — superannuation from the Baby Bonus	16
Amendment to the inter‑corporate dividend rebate for unfranked dividends	17
ATO pricing review — additional revenue from enhanced ATO resources	17
Deductibility of certain gifts	18
Ensuring companies are able to access the same business test	19
Exemption from income tax for the language, literacy and numeracy supplement	20
Extended eligibility for the Senior Australians’ Tax Offset	20
Implementing the next phase of business tax reform	21
Increase in Medicare levy thresholds	22
Increase in the medical expenses offset threshold	23
Maintaining the benefit of the franked dividend rebate	23
Remove taxation of financial instruments at point of conversion or exchange	23
Statutory effective life caps for certain classes of assets	24
Taxation of life insurance policyholders	25
Taxation relief for demergers	25
Indirect tax
Diesel/water emulsion relief from excise	26
Excise free treatment for non‑recyclable oils and lubricants	26
Imposition of excise on higher of labelled or actual alcoholic strength	27
National Excise Scheme for Low Alcohol Beer	27

Non-tax revenue
Additional reimbursements from the States and Territories	28
Australian Securities and Investments Commission increased fees	29
Authorised deposit‑taking institutions and insurance cost recovery	29
Part II:  Expense measures
Agriculture, Fisheries and Forestry
A Stronger Tasmania	48
Beef Expo 2003 and Gracemere Saleyards	48
Boosting rural veterinary services	49
Enhancing animal health infrastructure	49
Exceptional Circumstances in the northern wheatbelt region in WA	50
Incentives for Environmental Management Systems in agriculture	50
Northern Australia Quarantine Strategy	51
Northern Mallee Pipeline  Stage 7 South	51
Reprioritisation of funding for the Southern Bluefin Tuna Scientific Research Programme	52
Reprioritising funding for the National Food Industry Strategy	52
Southern Bluefin Tuna Scientific Research Programme	53
Attorney‑General’s
Australian Law Online	54
Continue to support community legal services	54
Expanding the capacity of Crime Stoppers	54
Increased funding for HIH Royal Commission	55
Keeping people out of the courts	55
Expand the research and development capability of the Australian Federal Police	55
Extension of the National Heroin Signature Programme (NHSP) to cocaine and amphetamines	56
Additional funding for the centenary celebrations of the High Court of Australia	56

Upgrading domestic security
Improved aviation security
Enhanced aviation security	59
Improved data access for border control agencies	60
Increased number of explosive detector dogs at Australian airports	60
Strengthening air safety	60
Identification of security threats
Enhanced technical capacity	61
Enhancement of guarding services by the Australian Protective Service	61
Enhancement of national security coordination and counter‑terrorism capabilities	62
E‑security national agenda	62
Additional container x‑ray machines	63
Additional pallet x‑ray machines	63
Enhanced Coastwatch communications capability	63
High frequency surface wave radar	64
Enhanced analytical and predictive crime capability for the Australian Bureau of Criminal Intelligence	64
Enhancement of protective security services	65
Expansion of the Law Enforcement Cooperation Programme	65
Extension of Project Axiom	65
Increased funding to intelligence agencies	66
Defence Communications Project	66
Research and development of a biometric identifier for the Australian passport	67
Increased capacity to respond to security incidents
Incident response capability	67
Australian Federal Police rapid response capability	68
Double the strike team capacity of the Australian Federal Police	69
Commonwealth Heads of Government Meeting (CHOGM) in Queensland	69
Counter‑terrorism:  improving operational capacity	69
Enhanced protective security	70
Enhancement to Defence’s tactical response capability	70
Communications, Information Technology and the Arts
A national media‑based youth arts festival	71
Continuation of funding for the Major Festivals Initiative	71
Continuation of funding for the Young and Emerging Artists Initiative	71
Enhanced facilities at the Australian Institute of Sport	72
Additional funding for the National Institute of Dramatic Art	72
Australia Business Arts Foundation	72
Better targeting of the telecommunications needs of indigenous communities	73
Commercial Radio Black Spots Programme	73
Continuation of funding for heritage collections	74
Continuation of funding for the Australian Museums Online Programme	74
Continuation of funding for the Contemporary Music Touring Programme	74
Continuation of funding for the National Institute of Circus Arts	75
Maintaining community broadcasting infrastructure and multicultural funding	75
Reprioritisation of funding from the Online Technical Assistance Programme	75
Telecommunications Action Plan for remote indigenous communities	76
Television Black Spots  alternative technical solutions	76
Reprioritisation of funding from the National Archives of Australia	77
Additional funding for the National Museum of Australia	77
Extension of SBS Television to population areas with 5,000 to 10,000 people	77
Defence
Additional funding for increased coastal surveillance	78
Additional funding for the War Against Terrorism	78
Commonwealth Heads of Government Meeting (CHOGM) in Queensland	79
Counter‑terrorism:  improving operational capacity	79
Defence Communications Project	79
Enhanced protective security	80
Enhancement to Defence’s tactical response capability	80
E‑security national agenda	81
Incident response capability	81
Increased funding to intelligence agencies	82
Increased munitions war ‑ stocks	82
Reprioritisation of Defence administrative spending to operational requirements	82
Rescheduling of major capital equipment acquisitions	83
Education, Science and Training
Actuarial assessment of unfunded higher education superannuation	83
Australia’s radioactive waste management strategy	84
Expanding School Based New Apprenticeships	84
Extension of the English as a Second Language  New Arrivals Programme	85
Improving information technology skills for older workers	85
Innovation New Apprenticeship Incentive	86
Maintaining funding to the Anglo‑Australian Telescope Board	86
Quality Teacher Programme	86
Rationalisation of funding for State and Territory Industry Training Advisory Bodies	87
Reprioritisation of portfolio resourcing	87
Review of Australia’s veterinary profession to address the shortage of rural based large livestock veterinarians	88
The General Sir John Monash Awards	88
University of Tasmania — Graduate Diploma in Environment and Planning	89
Employment and Workplace Relations
Funding to support the appointment of additional Members to the Australian Industrial Relations Commission	89
Arrangements for the Third Employment Services Contract	89
Environment and Heritage
Expansion of the market for Biofuels	91
Rationalisation of Australian Greenhouse Office Programmes	91
Development of sewerage schemes for Boat Harbour and Sisters Beach, Tasmania	91
National Oceans Policy	92
Additional funding for the Sydney Harbour Federation Trust	92
Family and Community Services
Additional funding for changes to social security arrangements with New Zealand	93
Better monitoring of preparing for Work Activity Agreements	93
Changes to the indexation provisions for Commonwealth support of the child care sector	94
Compliance Package  assurance, research and development	94
Compliance Package  prevention and detection	95
Ex‑gratia payments to volunteer firefighters for lost income  New South Wales bushfires 2001‑02	96
Extension of funding to support family relationships	96
Extension of the Family and Community Networks Initiative	96
Extension of waiver provision for Newstart recipients	97
Four new international social security agreements	97
Implementation of certain Australians Working Together measures	98
National reciprocal transport concessions for State Seniors Card holders	99
Prime Minister’s Community Business Partnership	99
Recognising and improving the work capacity of people with a disability	100
Reduced penalties for non‑attendance at interviews	101
Reprioritisation of departmental resources	101
Restricting activity test exemptions for Newstart Allowance and Youth Allowance recipients	102
Revised funding for the Stronger Families and Communities Strategy	102
Third Commonwealth State Territory Disability Agreement	102
Finance and Administration
Continuation of resourcing for asset sales function	104
Deferral of the sale of the Commonwealth’s shareholding in the Australian Submarine Corporation  sale costs	104
More efficient administration of the Australian Antarctic Southern Ocean Profiling Project	105

Foreign Affairs and Trade
Australia’s contribution to the Heavily Indebted Poor Countries (HIPC) Initiative	105
Increase in the Export Market Development Grants minimum grant	106
Integration and expansion of TradeStart and Export Access Programmes	106
Health and Ageing
Additional Commonwealth support for the Royal Flying Doctor Service	107
Additional support for carers of older Australians	107
Adjustment of the Reciprocal Health Care Agreement with New Zealand	107
Allowing new aged care residents a 28 day period of grace from income testing	108
Asthma Management Programme — restoration of funding	108
Better arthritis care	109
Better treatment for cancer patients	109
Capital assistance for aged care in rural and remote Australia	109
Capital works at the Children’s Cancer Research Institute	110
Community partnerships initiative	110
Croc Festivals	111
Delisting of Caverject from the Pharmaceutical Benefits Scheme	111
Enhanced assessment of concessional residential status	111
Increased access to Medicare claiming through pharmacies	112
Increased funding for aged care administration	112
Increased funding for drug treatment	113
Increased residential aged care subsidies	113
Investment in preventive health	114
Listing of Glivec on the Pharmaceutical Benefits Scheme	114
Medical Specialist Outreach Assistance Programme  restoration of funding	115
More aged care nurses	115
More care services in retirement villages	115
More community aged care packages	116
More doctors for outer metropolitan areas	116
More support for ageing carers of people with disabilities	117
More support for carers of people with dementia	117
National Illicit Drug Strategy	117
Palliative care in the community	118
Productive Ageing Centre	118
Reduction in funding for No or Known Gaps information programme to fund capital works at the Children’s Cancer Research Institute	119
Retractable needles and syringes	119
Review of pricing arrangements for residential aged care subsidies	119
Staying at home  care and support for older Australians	120
Support for aged care training	120
Support for Human Pituitary Hormone recipients	121
Sustaining the Pharmaceutical Benefits Scheme  facilitating the use of generic medicines	121
Sustaining the Pharmaceutical Benefits Scheme  improved data analysis and compliance activities	122
Sustaining the Pharmaceutical Benefits Scheme  increased information provision to doctors by industry	122
Sustaining the Pharmaceutical Benefits Scheme  realigning patient co‑payments and safety nets	123
Sustaining the Pharmaceutical Benefits Scheme  reductions in pharmacy fraud	123
Sustaining the Pharmaceutical Benefits Scheme  reinforcing the commitment to evidence based medicine	124
Sustaining the Pharmaceutical Benefits Scheme  restrictions on doctor shopping	125
Visudyne Therapy	125
Withdrawal of funding for ‘GP House’	126
Immigration and Multicultural and Indigenous Affairs
Enhanced training of directors of indigenous organisations	126
Australian Citizenship promotion	127
Continuation of the Adult Migrant English Programme special initiatives	127
Continuation of the Living in Harmony initiative	128
Extension of Safehaven allowance	128
Extension of Temporary Protection Visa allowance	128
Increase in the permanent migrant intake	129
Location of new immigration detention facility in South‑East Queensland:  offsetting reduction in costs	130
Maintain funding for the Integrated Humanitarian Settlement Strategy	130
Response to the Senate Inquiry for Child Migration	131
Settlement services for migrants and humanitarian entrants	131
Protecting Australia’s borders
Additional funding to address unauthorised arrivals	134
Construction of a purpose built permanent Immigration Reception And Processing Centre on Christmas Island	135
Funding package to the Afghan Interim Authority	136
Long term strategy for immigration detention facilities in Australia	136
Onshore savings flowing from the offshore processing strategy	137
Reception and administration of successful asylum seekers	137
Reception and processing of asylum seekers at offshore locations (Australian external territories)	138
Reception and processing of asylum seekers at offshore locations (third countries)	138
Regional Cooperation Agreement	139
Reintegration assistance for Afghans	139
Reintegration assistance for non‑Afghans	140
Doubling of Customs’ National Marine Unit surveillance and response capacity	140
Increased Coastwatch surveillance	141
Provision of five boats to the Indonesian Police	141
Funding under the Memorandum of Understanding with Nauru to address unauthorised arrivals	141
Ambassador for People Smuggling Issues	142
Continuation of Australia’s temporary presence in Nauru	142
Additional funding for increased coastal surveillance	143

Industry, Tourism and Resources
Further funding for the Australian Tourist Commission	143
Additional funding for the See Australia Domestic Tourism Initiative	143
Assistance to Methanex Corporation	144
Assistance to Mitsubishi Motors Corporation	144
Assistance to Rio Tinto to commercialise new iron smelting technology	144
Australian Stockman’s Hall of Fame and Outback Heritage Centre	145
Back of Bourke Exhibition Centre	145
Cairns Foreshore Promenade Development project	146
Derby Hydrogen Tidal Study	146
Development of a National Offshore Safety Authority	146
Fishing Hall of Fame and World Heritage Fraser Island Interpretive Centre Project	147
Funding for the Travel Compensation Fund	147
Increased funding for the Regional Tourism Programme	147
Increased industry assistance to small and medium enterprises	148
Invest Australia  investment promotion and attraction	148
Mentor Resources	148
Rationalisation of assistance to the printing industry	149
Rationalisation of assistance to the Textiles, Clothing and Footwear (TCF) industry	149
Rationalisation of assistance to the tourism industry	150
Rationalisation of funding for international organisations contributions	150
Signage for Magnetic Island	150
Small Business Assistance Programme	151
Tasmanian regional tourism infrastructure initiatives	151
Wine Industry Programme	151
New geoscience funding for securing Australia’s oil supply	152
Prime Minister and Cabinet
Enhanced complaint management by the Ombudsman’s office	152

Transport and Regional Services
Artificial Reef Mackay	153
Commonwealth contribution to the construction of the Lismore flood levee	153
Commonwealth contribution to the New South Wales Bushfire Relief Appeal	153
Construction of the Bert Hinkler Hall of Aviation Museum	154
East Coast Very High Speed Train scoping study	154
Enhancement of the Bass Strait Passenger Vehicle Equalisation Scheme	155
Extension of the Federal Road Safety Black Spot Programme	155
Feasibility study for the Gold Coast Light Rail Project	155
Further Commonwealth contribution to the New South Wales bushfires	156
National Highway and Roads of National Importance	156
Payment scheme for Airservices Australia’s enroute charges	156
Waterfront asbestos — related injury compensation	157
Treasury
Additional funding for the Australian Prudential Regulation Authority for costs associated with the HIH Royal Commission	158
Authorised deposit‑taking institutions and insurance cost recovery	158
Additional funding for the Australian Securities and Investments Commission for costs associated with the HIH Royal Commission	159
Australian Securities and Investments Commission Output Pricing Review	159
Implementation of expanded obligations under the Financial Services Reform Act	160
A Better Superannuation System  allow temporary residents to access their superannuation after they have departed Australia	160
A Better Superannuation System  Government superannuation co‑contribution for low income earners	161
A Better Superannuation System  Government superannuation co‑contributions for low income earners  implementation and administration	161
A Better Superannuation System  quarterly Superannuation Guarantee contributions	162
ATO pricing review – enhanced ATO resources	162
Baby Bonus	163
Baby Bonus  implementation and administration	164
Choice of superannuation fund and portability	164
Extension to the Diesel Fuel Rebate Scheme	165
Intergovernmental Agreement — enhanced resources for GST administration	165
Streamlined Company Registration	166
Establishment of the Office of the Inspector General of Taxation	166
Extension of the Additional First Home Owners Scheme	167
Reduction in Budget Balancing Assistance as a result of not indexing petroleum Revenue Replacement Payments forgone	167
Reduction in Budget Balancing Assistance resulting from the National Excise Scheme for Low Alcohol Beer	168
Review of competition provisions of the Trade Practices Act	168
United Medical Protection (UMP)/Australasian Medical Insurance Ltd (AMIL) insolvency adviser	169
United Medical Protection (UMP)/Australasian Medical Insurance Ltd (AMIL) Guarantee	169
Veterans’ Affairs
Extend the Gold Card to Australian veterans over 70 years of age with post World War II qualifying service	170
Index the ceiling rate of income support supplement for war widows	170
Part III:  Capital measures
Attorney‑General’s
Additional container x‑ray machines	177
Additional funding to address unauthorised arrivals	177
Additional pallet x‑ray machines	177
Doubling of Customs’ National Marine Unit surveillance and response capacity	178
Improved data access for border control agencies	178
Australian Federal Police rapid response capability	179
Double the strike team capacity of the Australian Federal Police	179
Enhanced analytical and predictive crime capability for the Australian Bureau of Criminal Intelligence	180
Enhancement of protective security services	180
E‑security national agenda	180
Expansion of the Law Enforcement Cooperation Programme	181
Extension of Project Axiom	181
Enhanced technical capacity	182
Increased funding to intelligence agencies	182
Communications, Information Technology and the Arts
Enhanced facilities at the Australian Institute of Sport	183
Reprioritisation of capital expenditure from the National Archives of Australia	183
Special Broadcasting Service Corporation  refinancing of Artarmon property loan	184
Defence
Enhanced protective security	184
Enhancement to Defence’s tactical response capability	185
Funding to cover shortfall in non‑property sales	185
Incident response capability	185
Location of new immigration detention facility in South‑East Queensland	186
Education, Science and Training
CSIRO Property sales	186
Extension of the Postgraduate Education Loans Scheme	187
Employment and Workplace Relations
Arrangements for the Third Employment Services Contract	187
Finance and Administration
Deferral of the sale of the Commonwealth’s shareholding in the Australian Submarine Corporation	188
Immigration and Multicultural and Indigenous Affairs
Construction of a purpose built permanent immigration reception and processing centre on Christmas Island	189

Transport and Regional Services
New freight and passenger facilities at Rumah Baru on West Island, Cocos (Keeling) Islands	190
Treasury
A Better Superannuation System  quarterly Superannuation Guarantee contributions	190
Baby Bonus  implementation and administration	191
Cross Portfolio
Reduce the Commonwealth Property Principles rate to 11.0 per cent	191