Home > Mid-Year Economic and Fiscal Outlook > Appendix A: Policy Decisions Taken Since the 2011‑12 Budget > Expense Measures > Treasury

Appendix A: Expense Measures (Continued)

Treasury

Australian Financial Centre Taskforce Secretariat

Expense ($m)
	2010‑11	2011‑12	2012‑13	2013‑14	2014-15
Department of the Treasury	-	0.2	-	-	-
Related revenue ($m)
Department of the Treasury	-	0.2	-	-	-

The Government will provide $165,000 in 2011‑12 for the continued employment of a part‑time Executive Director of the Australian Financial Centre Taskforce Secretariat. The Australian Financial Centre Taskforce oversees the development of initiatives to enhance the competitiveness of Australia as a financial centre.

Funding will be sourced from interest revenue earned on unclaimed monies held in the Companies and Unclaimed Moneys Special Account (CUMSA). This has no impact on the budget as the interest earned by CUMSA is not included in Australian Government revenue until a decision has been made for its expenditure.

Clean Energy Finance Corporation

Expense ($m)
	2010‑11	2011‑12	2012‑13	2013‑14	2014-15
Department of the Treasury	-	2.7	-	-	-
Clean Energy Finance Corporation	-	-	19.6	466.9	543.2
Total - Expense	-	2.7	19.6	466.9	543.2
Related revenue ($m)
Clean Energy Finance Corporation	-	-	-	-	88.6

The Government will provide $2.0 billion a year for five years from 2013‑14 into the Clean Energy Finance Corporation (CEFC). The CEFC will provide commercial and concessional loans and equity for the commercialisation and deployment of renewable energy and enabling technologies, energy efficiency and low‑emissions technologies. It will also invest in manufacturing businesses that focus on producing inputs required for these technologies.

The Government has appointed an expert review panel to report to the Deputy Prime Minister and Treasurer and the Minister for Finance and Deregulation by mid‑March 2012 on: the implementation plan for the establishment of the CEFC; the investment mandate and risk management approach of the CEFC; and governance arrangements of the CEFC. The recommendations of the expert review will inform the drafting of legislation, which will be introduced into Parliament in 2012 to allow the CEFC to commence operations in 2013‑14.

The CEFC will have a net impact on the fiscal balance of $943.8 million over the forward estimates and a net impact on the underlying cash balance of $312.0 million over the same period. In 2014‑15, interest revenue from investments will have a positive impact on the fiscal balance of $88.6 million and a positive impact on the underlying cash balance of $60.8 million.

The fiscal and underlying cash balance impacts include: departmental expenses; a prudent recognition that some investments will not be recovered; and interest revenue. The fiscal balance impact also includes the concessional component of concessional loans. This treatment reflects budget accounting standards and is consistent with the treatment of similar investments elsewhere in the budget.

$60.0 million over four years from 2011‑12 will be provided to support the establishment and operating costs for the CEFC, including $2.7 million in 2011‑12 to the Department of the Treasury to assist the expert review panel.

This measure delivers on the Government's plan for a clean energy future.

Further information can be found in the joint press release of 10 July 2011 issued by the Prime Minister, the Deputy Prime Minister and Treasurer and the Minister for Climate Change and Energy Efficiency and the joint press release of 12 October 2011 issued by the Deputy Prime Minister and Treasurer and the Minister for Climate Change and Energy Efficiency.

Clean Energy Future — Compliance

Expense ($m)
	2010‑11	2011‑12	2012‑13	2013‑14	2014-15
Australian Competition and Consumer Commission	-	2.2	4.4	4.1	2.1
Australian Securities and Investments Commission	-	0.4	2.0	1.2	1.1
Total - Expense	-	2.6	6.3	5.3	3.2
Related revenue ($m)
Australian Securities and Investments Commission	-	*	*	*	*

The Government will provide $12.8 million over four years to the Australian Competition and Consumer Commission (ACCC) to investigate businesses that make false or misleading claims about the impact of a carbon price which contravenes the Australian Consumer Law (ACL). The ACCC will also raise awareness among businesses and consumers of their obligations and rights, respectively, under the ACL.

The Government will also provide $4.6 million over four years to the Australian Securities and Investments Commission for licensing, compliance and deterrence activities in relation to Australian Financial Services license holders dealing in carbon permits. This measure will have an ongoing unquantifiable revenue impact from additional license fees.

This measure delivers on the Government's plan for a clean energy future.

Clean Energy Future — Governance — Productivity Commission Reviews

Expense ($m)
	2010‑11	2011‑12	2012‑13	2013‑14	2014-15
Productivity Commission	-	3.9	4.4	5.0	4.8

The Government will provide $18.0 million over four years to the Productivity Commission (PC) to undertake reviews relating to industry assistance, fuel tax arrangements, and undertake ongoing work to quantify mitigation policies in other major economies.

The PC will review the assistance arrangements under the Jobs and Competitiveness Program in the third year of the carbon price (2014‑15), including the treatment of the steel industry, and thereafter at regular intervals. A review of assistance provided to a particular activity could be conducted earlier than 2014‑15 if requested by the Government. The PC will also review the impact of a carbon price and associated Government assistance measures on the coal mining sector. The review will also examine the practicalities associated with moving to the model described in the Garnaut Climate Change Review — Update 2011, including whether it is the most effective and efficient means of preventing carbon leakage and assisting the industry to transition and whether the Government should adopt this approach.

In addition, once the carbon pricing mechanism has commenced, firms may make a request to the Government to have the impact of the carbon price on their sector assessed. The Government will establish a set of guidelines that set out when such requests would be referred to the PC and the terms of reference for these reviews.

Furthermore, the PC will conduct a review of fuel excise arrangements, including an examination of the merits of a regime based explicitly and precisely on the carbon and energy content of fuels.

This measure delivers on the Government's plan for a clean energy future.

Clean Energy Future — Putting a Price on Pollution — fuel tax credit reductions

Expense ($m)
	2010‑11	2011‑12	2012‑13	2013‑14	2014-15
Australian Taxation Office	-	2.2	-525.8	-49.0	-459.0

The Government will implement an effective carbon charge on the use of liquid and gaseous fuels through the fuel tax system by reducing the business fuel tax credit entitlement for the use of these fuels.

As households and light on‑road commercial vehicles are not eligible for fuel tax credits and pay the full rate of fuel tax, they will not also face a carbon price on the fuel they use for transport. The agriculture, forestry and fishing industries are exempt from the fuel tax credit reduction. Heavy on‑road transport will be exempted from the beginning of the scheme but will become subject to an effective carbon charge from 1 July 2014.

The Government will also allow large users of fuel to opt into the carbon pricing mechanism instead of paying the equivalent carbon price through the fuel tax system.

This measure delivers on the Government's plan for a clean energy future.

Further information can be found in the joint press release of 10 July 2011 issued by the Prime Minister, Deputy Prime Minister and Treasurer and the Minister for Climate Change and Energy Efficiency.

This measure is estimated to provide savings of $1,031.6 million over the forward estimates. The Government will provide the Australian Taxation Office $8.4 million to administer the arrangements.

The estimate for this measure varies from those published in the Explanatory Memorandum for the clean energy legislation as a result of updated data and methodological improvements relating to liquid fuels.

Clean Energy Future — Supporting Energy Markets — Energy Security Council

Expense ($m)
	2010‑11	2011‑12	2012‑13	2013‑14	2014-15
Department of the Treasury	-	-	-	-	-

The Government will establish a new Energy Security Council to advise it in the event of systemic risks to energy security and on measures to mitigate such risks. The Council will also advise on the provision of loans to electricity generators for the refinancing of existing debt if finance from the market is not available on reasonable terms.

The Department of the Treasury will provide secretariat support to the Council. This cost will be absorbed in 2011‑12 but further funding may be sought in later years.

This measure is part of the Government's plan for a clean energy future.

Establishment of a Tax Studies Institute

Expense ($m)
	2010‑11	2011‑12	2012‑13	2013‑14	2014-15
Department of the Treasury	-	-	1.0	1.0	1.0
Australian Taxation Office	-	-	-1.0	-1.1	-1.1
Total - Expense	-	-	-	-0.1	-0.1

The Government will provide $3.0 million over 3 years to establish an independent tax studies institute. The institute will undertake additional research into Australia's tax and transfer system. The institute will be a centre for research excellence linked to our universities and consider issues including the design and simplification of the tax‑transfer system.

Business donations to the Tax Studies Institute (TSI) will be an allowable tax deduction.

The cost of establishing the TSI and the revenue impact from listing the TSI as having deductible gift recipient status will be offset from a corresponding reduction in expenses from the Australian Taxation Office.

The establishment of a TSI was announced by the Deputy Prime Minister and Treasurer on 5 October 2011 at the conclusion of the Tax Forum.

This measure implements a change recommended by the Australia's Future Tax System Review, and continues the process of tax reform started in May last year with the release of the Government's Stronger, Fairer, Simpler package of reforms

See also the related revenue measure titled Philanthropy — updating the list of specifically listed deductible gift recipients.

Grant to Australasian Compliance Institute

Expense ($m)
	2010‑11	2011‑12	2012‑13	2013‑14	2014-15
Department of the Treasury	-	..	..	..	-
Related revenue ($m)
Department of the Treasury	-	..	..	..	-

The Government will provide a grant of $65,000 over three years from 2011‑12 to the Australasian Compliance Institute (ACI) to enable the ACI to engage Standards Australia to initiate the development of an international standard based on Australian Standard 3806 Compliance programs. This will assist in the promotion of a culture of compliance within Australian business.

Superannuation — low income superannuation contribution — modified eligibility criteria

Expense ($m)
	2010‑11	2011‑12	2012‑13	2013‑14	2014-15
Australian Taxation Office	-	-	-25.6	-26.6	-25.6

The Government will modify the eligibility criteria for the low income superannuation contribution (LISC), saving $77.8 million over three years to 2014‑15.

This measure will restrict eligibility to individuals earning 10 per cent or more of their income from employment or carrying on a business which also applies to the superannuation co‑contribution. In addition, the LISC will not be paid if it would be less than $20 in order to reduce administration costs, or the individual is a temporary resident.

Superannuation Co‑contribution — better targeting concession for low income earners

Expense ($m)
	2010‑11	2011‑12	2012‑13	2013‑14	2014-15
Australian Taxation Office	-	-	-352.0	-342.0	-329.0

The Government will better target superannuation concessions for low income earners by reducing the superannuation co‑contribution from 1 July 2012, when the new low income superannuation contribution commences. This measure is estimated to save $1.023 billion over three years to 2014‑15.

Under this measure, the matching rate will be reduced to 50 per cent, with a maximum co‑contribution of $500 for people with incomes up to $31,920 in 2012‑13 (with the amount available phasing down for incomes up to $46,920).

The low income superannuation contribution announced in the 2010‑11 Budget is better targeted and more widely available than the current co‑contribution, benefiting more than three times as many low‑income earners. The new concession effectively refunds the tax payable on superannuation contributions, including those made under the superannuation guarantee, for individuals earning up to $37,000.

Savings from this measure will be redirected to support other Government priorities.

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