BILLS DIGEST NO. 46, 2017–18              24 October 2017

Medicare Levy Amendment (National Disability Insurance Scheme Funding) Bill 2017 [and] related Bills

Phillip Hawkins
Economics Section

Anna Dunkley and Dr Hazel Ferguson
Social Policy Section

Date introduced: 17 August 2017

House:  House of Representatives

Portfolio: Treasury

Commencement: Various dates as set out in this Bills Digest.

Links: The links to the principal Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website. Links to the other Bills in this package are provided in the body of this Digest.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at October 2017.

Glossary

Table 1: abbreviations and acronyms

Abbreviation or acronym

Definition

BAF

Building Australia Fund

EIF

Education Investment Fund

Excess Non-Concessional Contributions Tax Bill

Superannuation (Excess Non-Concessional Contributions Tax) Amendment (National Disability Insurance Scheme Funding) Bill 2017

Excess Untaxed Roll-Over Amounts Tax Bill

Superannuation (Excess Untaxed Roll-Over Amounts Tax) Amendment (National Disability Insurance Scheme Funding) Bill 2017

Family Trust Distribution Bill

Family Trust Distribution Tax (Primary Liability) Amendment (National Disability Insurance Scheme Funding) Bill 2017

FBT Bill

Fringe Benefits Tax Amendment (National Disability Insurance Scheme Funding) Bill 2017

Income Tax Rates Amendment Bill

Income Tax Rates Amendment (National Disability Insurance Scheme Funding) Bill 2017

ITAA 1936

Income Tax Assessment Act 1936

ITAA 1997

Income Tax Assessment Act 1997

NBF Act

Nation-Building Funds Act 2008

NBF Repeal Bill

Nation-Building Funds Repeal (National Disability Insurance Scheme Funding) Bill 2017

NCOA

National Commission of Audit

NDIS

National Disability Insurance Scheme

NDIS Special Account Bill

National Disability Insurance Scheme Savings Fund Special Account Bill 2016

PC

Productivity Commission

PGPA Act

Public Governance, Performance and Accountability Act 2013

Principal Bill

Medicare Levy Amendment (National Disability Insurance Scheme Funding) Bill 2017

SAPTO

Seniors and Pensioners Tax Offset

TFN Withholding ESS Bill

Income Tax (TFN Withholding Tax (ESS)) Amendment (National Disability Insurance Scheme Funding) Bill 2017

Trustee Beneficiary Non-Disclosure No. 1 Bill

Taxation (Trustee Beneficiary Non-Disclosure Tax) (No. 1) Amendment (National Disability Insurance Scheme Funding) Bill 2017

Trustee Beneficiary Non-Disclosure No. 2 Bill

Taxation (Trustee Beneficiary Non-Disclosure Tax) (No. 2) Amendment (National Disability Insurance Scheme Funding) Bill 2017

Untainting Tax Bill

Treasury Laws Amendment (Untainting Tax) (National Disability Insurance Scheme Funding) Bill 2017

Purpose of the Bills

This Bills Digest refers to 11 Bills which make up a suite of Bills designed to assist in the funding of the National Disability Insurance Scheme (NDIS).

The principal Bill is the Medicare Levy Amendment (National Disability Insurance Scheme Funding) Bill 2017 (the Medicare Levy Amendment Bill) which amends the Medicare Levy Act 1986 to increase the Medicare levy from 2 per cent to 2.5 per cent.

There are nine related Bills (the Other Taxation Bills) which amend statutes which provide for tax rates that are linked to the rate of the Medicare levy or the highest marginal personal income tax rate inclusive of the Medicare levy.  The Other Taxation Bills are:

•       Fringe Benefits Tax Amendment (National Disability Insurance Scheme Funding) Bill 2017 (the FBT Bill)

•       Income Tax Rates Amendment (National Disability Insurance Scheme Funding) Bill 2017 (Income Tax Rates Amendment Bill)

•       Superannuation (Excess Non-Concessional Contributions Tax) Amendment (National Disability Insurance Scheme Funding) Bill 2017 (Excess Non-Concessional Contributions Tax Bill)

•       Superannuation (Excess Untaxed Roll-Over Amounts Tax) Amendment (National Disability Insurance Scheme Funding) Bill 2017 (Excess Untaxed Roll-Over Amounts Tax Bill)

•       Income Tax (TFN Withholding Tax (ESS)) Amendment (National Disability Insurance Scheme Funding) Bill 2017 (TFN Withholding ESS Bill)

•       Family Trust Distribution Tax (Primary Liability) Amendment (National Disability Insurance Scheme Funding) Bill 2017 (the Family Trust Distribution Bill)

•       Taxation (Trustee Beneficiary Non-Disclosure Tax) (No. 1) Amendment (National Disability Insurance Scheme Funding) Bill 2017 (Trustee Beneficiary Non-Disclosure No. 1 Bill)

•       Taxation (Trustee Beneficiary Non-Disclosure Tax) (No. 2) Amendment (National Disability Insurance Scheme Funding) Bill 2017 (Trustee Beneficiary Non-Disclosure No. 2 Bill)

•       Treasury Laws Amendment (Untainting Tax) (National Disability Insurance Scheme Funding) Bill 2017 (Untainting Tax Bill).

The Nation-Building Funds Repeal (National Disability Insurance Scheme Funding) Bill 2017 (the NBF Repeal Bill) contains an additional measure—the repeal of the Nation-Building Funds Act 2008 (the NBF Act). The purpose of the NBF Repeal Bill is to abolish the Building Australia Fund (BAF) and the Education Investment Fund (EIF). The Government has stated that the uncommitted balances of these funds ‘will be credited to the National Disability Insurance Scheme Savings Fund Special Account when it is established’.[1]

It is important to note that while the Government states that these Bills are linked to the funding of the NDIS, the Bills do not establish a funding mechanism for the NDIS. The National Disability Insurance Scheme Savings Fund Special Account (the NDIS special account) which is to be established by the National Disability Insurance Scheme Savings Fund Special Account Bill 2016 (the NDIS Special Account Bill) is intended for that purpose. However, the NDIS Special Account Bill has yet to be passed by the Parliament.[2]

Structure of the Bills

The Medicare Levy Amendment Bill has one Schedule which amends the Medicare Levy Act to increase the Medicare levy rate from two to 2.5 per cent and make consequential amendments to the Medicare levy phase-in provisions for low-income families and trusts. The Other Taxation Bills consist of one Schedule each, amending various statutes to increase taxes that are linked to the Medicare levy or to the top marginal personal income tax rate inclusive of the Medicare levy. The amendments to taxation laws are contained in separate Bills to satisfy the requirements of section 55 of the Constitution that ‘laws imposing taxation, except laws imposing duties of customs or of excise, shall deal with one subject of taxation only’.

The NBF Repeal Bill consists of one Schedule divided into three parts.

•       Part 1 repeals the NBF Act

•       Part 2 makes consequential amendments to the COAG Reform Fund Act 2008, the DisabilityCare Australia Fund Act 2013, the Future Fund Act 2006, the Health Insurance Act 1973 and the Medical Research Future Fund Act 2015 and

•       Part 3 contains the transitional provisions for the NBF Repeal Bill.

Background

National Disability Insurance Scheme

As set out above, the Government has stated that the additional funding from the Medicare levy increase and the uncommitted funding from the BAF and the EIF will to be used to assist with funding the NDIS.

The NDIS is a system of government support for eligible people with disability. It was trialled from July 2013, and is being progressively rolled out across Australia between 2016 and 2019.[3] The NDIS was established in response to a campaign for national disability insurance, and the Productivity Commission (PC) recommendation that Australia replace the previous ‘underfunded, unfair, fragmented, and inefficient’ system.[4]

The central component of the NDIS is individualised packages of ‘reasonable and necessary supports’ for eligible people under the age of 65.[5] The NDIS is also intended to provide all people with disability, their families and carers with information, links and referrals to disability and mainstream supports.[6] The NDIS is not intended to replace these mainstream supports and services, such as the school education, health and income support systems.[7]

The NDIS was established under the National Disability Insurance Scheme Act 2013, and is jointly governed and funded by the Australian and state and territory governments. Like many other social policy programs—such as Medicare and the Pharmaceutical Benefits Scheme—the NDIS is an uncapped (demand-driven) scheme, and is not means tested.[8]

Funding the National Disability Insurance Scheme

Initial intentions

Guaranteed future funding for disability services was part of the rationale for the NDIS.[9] The PC noted in its 2011 report that ‘current funding for disability is subject to the vagaries of governments’ budget cycles’.[10] It recommended that in order to provide a stable revenue stream ‘the Australian Government should finance the costs of the NDIS by directing payments from consolidated revenue into a ‘National Disability Insurance Premium Fund’, using an agreed formula entrenched in legislation’.[11]

However, the PC also outlined ‘less preferred’ options, including that the Australian Government could ‘legislate for a levy on personal income… with an increment added to the existing marginal income tax rates, and hypothecated to the full revenue needs of the NDIS’.[12] It also suggested ‘all governments could pool funding, subject to a long-run arrangement based on… [a] formula, and with pre-specified funding shares’.[13]

In response to the PC report, the Gillard Government announced that it would ‘start work immediately with states and territories on measures that will build the foundations for a National Disability Insurance Scheme’.[14]

Current arrangements

Following this, the Australian and state and territory governments created intergovernmental agreements establishing that funding for the NDIS would be drawn from a combination of sources from all governments.[15] This included some Australian Government funding previously directed to state and territory governments for disability services being redirected to the NDIS.[16] In addition, some funds are being transferred from existing disability programs and services to the NDIS.[17] However, governments committed to maintaining continuity of support until the NDIS is fully implemented, and it appears they will be required to continue funding ongoing support for people with disability who are not eligible for the NDIS.[18]

The NDIS is also partly funded from the initial increase to the Medicare levy, which was raised from 1.5 per cent to 2.0 per cent of taxable income from July 2014.[19] The resulting revenue is directed to the DisabilityCare Australia Fund, to be invested through the Future Fund.[20] The Australian Government receives approximately two-thirds of the revenue from the DisabilityCare Australia Fund, and the rest goes to state and territory governments to partially reimburse their contributions to the NDIS.[21] Other contributions are funded through general revenue, savings or borrowings.[22]

Arrangements for funding the NDIS are complex, and exact settings for the full scheme are still under consideration, as outlined in the PC’s position paper on NDIS costs.[23] While the amounts provided by state and territory governments will escalate at an agreed rate, it is predicted the proportion of funding provided by the Australian Government is likely to grow to more than half of total NDIS funding over time.[24] Further, the Australian Government is largely responsible for funding cost overruns, though arrangements were still being finalised as of June 2017.[25]

National Disability Insurance Scheme Savings Fund Special Account

The Government proposes to contribute the increased revenue from the Medicare levy and the uncommitted balances of the BAF and the EIF to the NDIS Special Account. The NDIS Special Account is to be established by the NDIS Special Account Bill which was introduced into the House of Representatives on 31 August 2016 and progressed to the Senate on 20 March 2017. However it has yet to be debated in the Senate.

The NDIS Special Account is a special account under the Public Governance, Performance and Accountability Act 2013 (PGPA Act) with the following purposes as set out in clause 6 of the NDIS Special Account Bill:

•       to assist the Commonwealth to meet its funding obligations in relation to the NDIS Act

•       to make payments to the National Disability Insurance Scheme Launch Transition Agency (the Agency) for the purposes of the Agency

•       to reduce the balance of the Special Account (and, therefore, the available appropriation for the account) without making a real or notional payment.[26]

The NDIS Special Account Bill was referred to the Senate Standing Committee on Community Affairs (Community Affairs Committee) for inquiry and report.[27] A number of submitters to the Community Affairs Committee questioned the need for a special account, particularly in addition to the DisabilityCare Australia Fund. The rationale for establishing the special account, according to the Department of Social Services, is to more quickly respond to urgent funding needs than would be possible from the DisabilityCare Australia Fund and because the NDIS Special Account is solely for the purpose of meeting the Commonwealth’s funding requirement, not state expenditures.[28]

Costs and ‘fully-funding’ the NDIS

There is an ongoing debate about whether the initial funding arrangements for the NDIS were sufficient to cover the full, continuing costs of the scheme. The Australian Labor Party (Labor) has maintained the ‘NDIS was fully funded by the former Labor Government in the 2013-14 Budget’.[29] However, this has been challenged by members of the current Government. For example, the Minister for Social Services, Christian Porter, has said that ‘the previous Labor government failed to fully-fund the NDIS, leaving a substantial funding gap of $3.8 billion for when the scheme is fully operational from 2020’.[30] Introducing the Medicare Levy Amendment Bill into the House of Representatives, the Treasurer, Scott Morrison, reiterated this view, declaring ‘[n]ow is the time to fully fund the NDIS once and for all, and, with this Bill, we will finally achieve that objective’.[31]

When the NDIS is fully implemented in 2019–20 it is predicted to cost $22 billion.[32] Of this, state and territory governments are expected to provide $10.3 billion, and the rest is to be funded by the Australian Government.[33] As shown in Chart 1 from the 2017–18 budget papers, the Government has indicated that funding from the proposed Medicare levy increase from July 2019 will cover the gap it has identified between the sources of funding identified above and the remaining amount it is obliged to provide under agreements with the states and territories.[34] The Government has indicated that the revenue raised through the increase in the Medicare levy will be directed to the proposed NDIS Special Account.

Chart 1: Commonwealth’s NDIS contribution and funding sources

Source: Australian Government, Budget strategy and outlook: budget paper no. 1: 2017–18, p. 3–10.

Given revenue from the Medicare levy is not intended to meet the full cost of the NDIS, it may not provide the stable revenue stream originally envisaged by the PC.[35] Moreover, it is unusual to focus on ‘fully-funding’ a national program such as the NDIS.

Hypothecation of taxation

While the Government has stated that the additional funding from the increase in the Medicare levy and other related taxes and the uncommitted balances of the BAF and the EIF will contribute to the NDIS Special Account, the Bills do not create a legal requirement to do so.  Rather the Explanatory Memorandum to the Bills states:

One-fifth of the revenue raised by the Medicare levy [the full, 0.5 per cent increase] from 1 July 2019 will be credited to the National Disability Insurance Scheme Savings Fund Special Account …[36]

Uncommitted funds from the Building Australia Fund and the Education Investment Fund will subsequently be credited to the National Disability Insurance Scheme Savings Fund Special Account when it is established.[37]

It should be noted however, that it is unusual for significant Commonwealth Government expenditure programs to be funded by taxes which are hypothecated for that purpose through legislation. The ongoing costs of the Age Pension, for example, are funded directly from the consolidated revenue fund as part of the ongoing costs of the Government’s core business. An example of levies that are hypothecated through legislation for specific purposes are agricultural levies.[38]

Committee consideration

Senate Standing Committee on Economics

The suite of Bills was referred to the Senate Standing Committee on Economics (Economics Committee) for inquiry.[39] The Economics Committee released its report on 16 October 2017 and recommended that the Bills be passed, however the Labor Party issued a dissenting report.[40] The Economics Committee had received 25 submissions.

The submissions to the Economics Committee were primarily from disability, care and community organisations who have differing views on the funding arrangements for the NDIS, and advocates from the higher education sector expressing concerns about abolition of the EIF. The views of submitters in relation to the repeal of the EIF are canvassed under the heading ‘Nation-building Funds Repeal Bill’ below.

Disability, carer and community organisations views on the Bill

Disability, carer and community organisations have emphasised that ‘secure, sustainable and sufficient long term funding for NDIS’ should not be politicised.[41] Generally, these groups have expressed support for changing the Medicare levy to generate funding for the NDIS, and indicated it is preferable to funding the NDIS through social welfare cuts.

Organisations that have expressed support for the Government’s proposal include the Australian Federation of Disability Organisations and the Disability Advocacy Network Australia.[42] National Disability Services (NDS), the peak industry body for non-government disability services, has ‘welcomed the Federal Government’s decision to fully fund its share of the NDIS by increasing the Medicare Levy’.[43] NDS also noted the Labor Party’s proposal to limit the increase to higher income earners, and stated it ‘has no view about which tax mix is preferable, but believes that a political argument over tax equity should not be allowed to jeopardise the securing of a funding stream for the NDIS’.[44]

The peak body for the community services sector, the Australian Council of Social Services (ACOSS), has also supported amending the Medicare Levy to raise revenue for the NDIS.[45] However, ACOSS has proposed the following alternative options for restructuring the Medicare levy and raising $4 billion ‘in a more progressive way’:

Removing the health insurance exemption from the Surcharge (as proposed by the Australian Greens); broadening the income ‘base’ of the Levy to include tax-sheltered income; replacing the Levy and Surcharge with a Levy with a three-tier tax scale; and replacing them with a Levy based on a proportion of personal income tax paid each year.[46]

The Disabled People’s Organisations Australia alliance has supported these proposals from ACOSS.[47]

In contrast, the Australian Nursing and Midwifery Federation (ANMF) has opposed ‘[t]ying the Medicare levy to funding the NDIS’, arguing this ‘risks creating a prejudice among the community that disability is increasing health care costs without the benefit of providing increased health services for all’.[48] Instead, ANMF advocates generating funding for the NDIS by ‘reversing the corporate tax cut and implementing other reforms’.[49]

Other stakeholders have suggested the debate about ‘fully-funding’ the NDIS should be broadened to consider whether funding the NDIS is treated as ‘peripheral’ or ‘core’ government business. For example, the representative groups Children and Young People with Disability Australia (CYDA) and Young People in Nursing Homes National Alliance (YPINHNA) have argued:

Because the NDIS will support the realisation of Australia’s human rights obligations and provide essential services and supports for people with disability, CYDA and YPINHNA believe it is critical to recognise the Scheme as a core area of government spending.[50]

YPINHNA further emphasised:

…if the NDIS was a core function of government, there would be no ‘shortfalls’ as they are conceived in this Bill [the National Disability Insurance Scheme Savings Fund Special Account Bill 2016]. Core functions of government do not have ‘accounts’ to ensure their survival and obligations … nor should the NDIS.[51]

For these reasons, CYDA and YPINHNA are ‘unable to support the legislative package’.[52]

Senate Standing Committee for the Scrutiny of Bills

The Senate Standing Committee for the Scrutiny of Bills had no comment in relation to the Bills.[53]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bills’ compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bills are compatible.[54]

Parliamentary Joint Committee on Human Rights

The Parliamentary Joint Committee on Human Rights considered that the Bills do not raise any human rights concerns.[55]

Medicare Levy Amendment Bill

The Medicare Levy Amendment Bill implements the measure announced by the Government in the 2017–18 Budget to increase the Medicare levy from two per cent to 2.5 per cent to assist with funding the NDIS.[56] The Other Taxation Bills amend other statutes which provide for tax rates that are linked to the rate of the Medicare levy or the highest marginal personal income tax rate inclusive of the Medicare levy.

Background—Medicare levy

The Medicare levy is applied in addition to personal income tax, currently equal to two per cent of an individual’s total taxable income.  Exemptions from the Medicare levy apply to foreign residents, individuals with certain medical conditions and individuals not entitled to Medicare benefits.[57]

Low-income individuals, families and pensioners may pay the Medicare levy at a reduced rate based on their personal[58] or family income.[59] Below certain income thresholds, low-income earners pay no Medicare levy. Above those thresholds the Medicare levy phases-in according to a formula specified in legislation. The low-income thresholds are higher for pensioners and seniors who are eligible to receive the Seniors and Pensioners Tax Offset (SAPTO) and for families with dependent children (the thresholds increase further with the number of dependents). These income thresholds and the formulas for phasing-in the Medicare levy are specified in the Medicare Levy Act. The income thresholds are increased annually through legislation.[60]

The Medicare levy was first introduced in February 1984 to help fund Australia's national health insurance scheme Medicare and was set at one per cent of taxable income. Since then it has been increased permanently on a number of occasions to offset increases in medical costs; in 1986 to 1.25 per cent, in 1993 to 1.4 per cent and in 1995 to 1.5 per cent.[61] It was increased to two per cent in 2013 by the Gillard Government to help fund the NDIS (at that time called DisabilityCare).[62] A temporary surcharge to the levy of 0.2 per cent was also applied for one year in 1996 to help fund the Howard Government’s gun buyback scheme in the wake of the Port Arthur shootings.[63]

Opposition/minor party views on increasing the Medicare levy

In its dissenting report on the inquiry into the Bills, Labor reiterated its proposal to limit the increase in the Medicare levy to individuals earning over $87,000 and to retain the temporary Budget repair levy on individuals earning over $180,000.[64]

The Government is reportedly still negotiating the increase in the Medicare levy with the Australian Greens and other non-government parties and independents. Senator Derryn Hinch reportedly supports the proposal.[65]

Financial implications

According to the Explanatory Memorandum to the Bills the increase in the Medicare levy brought about by the Medicare Levy Amendment Bill and the associated tax changes contained in the Other Taxation Bills will increase revenue by $8.2 billion over the 2017-18 Budget forward estimates period.[66]

Commencement

The Medicare Levy Amendment Bill commences on the first 1 January, 1 April, 1 July or 1 October after Royal Assent. The amendments apply to assessments for the 2019–20 year of income and later years of income.[67]

Key provisions

The Medicare Levy Amendment Bill amends the Medicare Levy Act. Currently section 6 of the Medicare Levy Act provides that the rate of the levy payable in specified circumstances is two per cent of taxable income. Item 1 amends subsections 6(1) to (6) to increase the Medicare levy tax rate from two to 2.5 per cent in each of those circumstances, being for individuals[68] and trustees of trusts,[69] including managed investment trusts.[70]

Section 7 of the Medicare Levy Act sets the amount of the levy to be paid in cases of small incomes. Item 2 of the Medicare Levy Amendment Bill amends subsection 7(4) which currently provides that a reduced rate of Medicare levy is paid by a trust which has taxable income for a year of between $416 and $520 per annum. The amendment increases the top of this band to $555 per annum.

Section 8 of the Medicare Levy Act sets out the formula for calculating the amount of levy payable by a person who has a spouse or dependants. Item 3 of the Medicare Levy Amendment Bill amends subsection 8(2) of the Medicare Levy Act which sets out the calculation for phasing-in the Medicare levy for low-income families. This provides for a reduction in Medicare levy based on combined family income within a certain income range.  The lower threshold of this range is called the ‘family income threshold’.[71] Above the family income threshold the Medicare levy phases in according to the formula at subsection 8(2). The formula is amended by the Bill to reflect the increase in the Medicare levy rate to 2.5 per cent.

The changes in this Bill apply to the 2019-20 income year and all later income years.

Other Taxation Bills

Commencement

The Other Taxation Bills commence at the same time as Schedule 1 of the Medicare Levy Amendment (National Disability Insurance Scheme Funding) Act 2017. However, the provisions do not commence at all if that Schedule does not commence.

Key provisions

FBT Bill

The FBT Bill amends the Fringe Benefits Tax Act 1986 which imposes tax in respect of the fringe benefits taxable amount of an employer of a year of tax.[72] Currently the rate of the tax is 47 per cent.[73] The FBT Bill amends section 6 of the Fringe Benefit Tax Act to increase the rate to 47.5 percent.

The amendments in the FBT Bill apply to the tax year starting on 1 April 2019 and all later years of tax, as the FBT year runs from 1 April to 31 March.[74]

Income Tax Rates Amendment Bill

The Income Tax Rates Amendment Bill amends the Income Tax Rates Act 1986. Part III of the Income Tax Rates Act sets the rates of income tax payable upon incomes of companies, prescribed unit trusts, superannuation funds and certain other trusts. In particular, section 29 sets the rate of tax payable by:

•       a trustee of a complying superannuation fund in respect of the no-TFN contributions income of the fund

•       a trustee of a non-complying superannuation fund in respect of the no-TFN contributions income of the fund and

•       a company that is an Retirement Savings Account provider in respect of no-TFN contributions income.[75]

Currently the rate of tax payable under the Income Tax Rates Act is worked out using the formula in subsection 29(2), which requires as part of the process, the addition of two per cent to a base amount. The Income Tax Rates Amendment Bill amends that step in the formula by increasing the additional amount to 2.5 per cent.

Excess Non-Concessional Contributions Tax Bill

Section 292-80 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that a person is liable to pay excess non-concessional contributions tax imposed by the Superannuation (Excess Non-concessional Contributions Tax) Act 2007 if the person has excess non-concessional contributions for a financial year. A person has excess non-concessional contributions where their non-concessional contributions exceed the relevant cap, and they elect not to release the amount of the excess and associated earnings.[76]

The Excess Non-Concessional Contributions Tax Bill amends section 5 of the Superannuation (Excess Non-concessional Contributions Tax) Act to increase the tax from 47 percent to 47.5 percent of the person’s excess non-concessional contributions for a financial year.

Excess Untaxed Roll-Over Amounts Tax Bill

Members of most super funds can request that their super benefits be transferred into a fund of their choice.[77] Division 306 of the ITAA 1997 sets out the tax treatment of payments made from one superannuation plan to another superannuation plan, and of similar payments.[78] This is called a roll-over superannuation benefit.[79] Where a roll-over superannuation benefit includes an element that has been untaxed —and the amount of the benefit exceeds the person’s untaxed plan cap amount, the person is liable to tax on the amount of the excess.[80]

The Excess Untaxed Roll-Over Amounts Tax Bill amends subsection 5(2) of the Superannuation (Excess Untaxed Roll-over Amounts Tax) Act 2007 so that the formula for calculating the tax liability includes an increase from two per cent to 2.5 per cent.

TFN Withholding Tax (ESS) Bill

Subdivision 14-C of the Taxation Administration Act 1953 applies where an employer provides one or more employee share scheme (ESS)[81] interests under an employee share scheme and the employee has not quoted their Australian business number or their tax file number to their employer by the end of the income year. Where this section applies the Income Tax (TFN Withholding Tax (ESS)) Act 2009 imposes additional income tax on amounts that are included in a person’s assessable income.

The TFN Withholding Tax (ESS) Bill amends paragraph 4(b) of the Income Tax (TFN Withholding Tax (ESS)) Act so that the formula for calculating the additional tax liability includes an increase from two per cent to 2.5 per cent.

Family Trust Distribution Bill

The Family Trust Distribution Tax (Primary Liability) Act 1998 imposes tax that is payable on the amount or value of income or capital that is assessed under section 271-15,[82] 271-20,[83] 271-25,[84] 271-30[85] or 271-55[86] in Schedule 2F to the Income Tax Assessment Act 1936 (ITAA 1936).

Currently the rate of tax is set at 47 per cent. The Family Trust Distribution Bill amends section 4 of the Family Trust Distribution Tax (Primary Liability) Act to increase the tax rate to 47.5 per cent.

Trustee Beneficiary Non-Disclosure (No. 1) Bill

The Taxation (Trustee Beneficiary Non-disclosure Tax) Act (No. 1) 2007 imposes tax on the amount payable under paragraph 102UK(2)(a) of the ITAA 1936. Section 102UK relates to the giving of a trustee beneficiary statement in respect of a specified period.

Currently the amount of the tax is set at 47 per cent. The Trustee Beneficiary Non-Disclosure (No. 1) Bill amends section 4 of the Taxation (Trustee Beneficiary Non-disclosure Tax) Act (No. 1) to increase the rate to 47.5 per cent.

Trustee Beneficiary Non-Disclosure (No. 2) Bill

The Taxation (Trustee Beneficiary Non-disclosure Tax) Act (No. 2) 2007 imposes tax on the amount payable under paragraph 102UM(2)(a) of the ITAA 1936. It applies where a share of the net income of a closely held trust is included in the assessable income of a trustee and beneficiary and the share (or part of it) is income which the trustee of the closely held trust becomes entitled to.

Currently the amount of the tax is set at 47 per cent. The Trustee Beneficiary Non-Disclosure (No. 2) Bill amends section 4 of the Taxation (Trustee Beneficiary Non-disclosure Tax) Act (No. 2) to increase the rate to 47.5 per cent.

Untainting Tax Bill

The share capital account tainting rules in the ITAA 1997 are designed to prevent a company from transferring profits into a share capital account and then distributing these amounts to shareholders disguised as a non-assessable capital distribution.

If a company's share capital account is tainted:

•       a franking debit arises in the company's franking account at the end of the franking period in which the transfer occurs

•       any distribution from the account is taxed as an unfranked dividend in the hands of the shareholder

•       the account is generally not taken to be a share capital account for the purposes of the ITAA 1936 and ITAA 1997.

A company's share capital account remains tainted until the company chooses to untaint the account. The choice to untaint a company's share capital account can be made at any time, but once the choice is made it cannot be revoked.[87]

Where the company chooses to untaint the account an untainting tax is payable. Section 197-60 of the ITAA 1997 sets out the formula for calculating the amount of an untainting tax which is payable. The Untainting Tax Bill amends subsection 197-60 to increase the applicable tax rate by 0.5 per cent.

With the exception of the amendments in the FBT Bill, the taxes affected by the Other Taxation Bills apply from 1 July 2019, or the 2019–20 income year and all later income years.

Nation-building Funds Repeal Bill

The NBF Repeal Bill implements the Government’s announcement in the 2016–17 Mid-year Economic and Fiscal Outlook (MYEFO) that it would use the uncommitted funds in the BAF and the EIF to assist with funding the NDIS and reducing Commonwealth debt.[88]

Background—the Funds

The NBF Repeal Bill repeals the NBF Act. The NBF Act as enacted established three Funds—the BAF, the EIF and the Health and Hospitals Fund.[89] The balance of the Health and Hospitals Fund was transferred into the Medical Research Future Fund with the enactment of the Medical Research Future Fund Act 2015.[90]

Initial funding for the BAF was around $2.5 billion from the Communications Fund and $966 million from the Telstra Sale Special Account.[91] Initial funding for the EIF was around $6.5 billion from the balance of the Higher Education Endowment Fund (HEEF), which had been established in 2007 and was being replaced by the new Fund.[92] Ongoing funding for the BAF and the EIF was intended to come from Commonwealth Budget surpluses and Fund investments. In total, $12.5 billion from the 2007-08 Budget surplus was credited to the Nation-building Funds, including $7.5 billion to the BAF and $5 billion to the Health and Hospitals Fund.[93] However, with the Budget going into deficit from 2008–09, this was the only year that funds from surpluses were credited to the Nation-building Funds.[94]

In 2014, the National Commission of Audit (NCOA) suggested ‘the Government may wish to re-examine the need for the Nation-building funds in their current form’. The NCOA identified:

A weakness in current infrastructure funding arrangements between the Commonwealth and the States is that Commonwealth funding is generally focused on investing in new projects…

The current arrangements for the three Nation-building Funds, with funding only able to be directed to capital expenditure, leads to an undue emphasis on ‘ribbon cutting’ opportunities generally associated with new projects, at the expense of periodic maintenance and of small-scale improvements that could postpone or even avoid the need for costly asset expansions.[95]

In the subsequent 2014–15 Budget, the Government announced the BAF and the EIF would be abolished and the unallocated funds transferred to the Asset Recycling Fund (ARF), with existing EIF projects to continue to receive funding according to their funding agreements.[96] Accordingly, the Asset Recycling Fund Bill 2014 was introduced into the House of Representatives on 29 May 2014. However, the Bill lapsed when the Parliament was prorogued on 15 April 2016.

The rationale for the repeal of the NBF Act is to redirect the uncommitted balance of the BAF and the EIF to the NDIS Special Account. As at 30 June 2017, the uncommitted balance of the BAF is $3.79 billion and the uncommitted balance of the EIF is $3.79 billion, with a current total of $7.57 billion.[97]

Building Australia Fund

The BAF is a Special Account for the purposes of the Public Governance, Performance and Accountability Act 2013 (the PGPA Act). It was established on 1 January 2009 by section 12 of the NBF Act ‘to finance capital investment in transport infrastructure (such as roads, rail, urban transport and ports), communications infrastructure (such as broadband), energy infrastructure and water infrastructure’.[98]

Infrastructure Australia evaluates projects and provides advice to Government Ministers on proposals to be funded from the BAF. Infrastructure Australia is required to evaluate projects against the BAF Evaluation Criteria which includes assessing the extent to which projects address national infrastructure priorities and are justified by available evidence and data (including cost-benefit analysis).[99] Since its inception the BAF has contributed a total of $9.8 billion to approved projects[100] including $2.4 billion for the National Broadband Network, $3.2 billion in Victoria for regional rail and $1.5 billion for the Hunter Expressway in NSW.[101]

Education Investment Fund

The EIF is also a Special Account for the purposes of the PGPA Act. It was established on 1 January 2009 by section 131 of the NBF Act to provide dedicated ongoing capital funding for tertiary education and research infrastructure.[102] The EIF was established by the Rudd Labor Government in response to concerns about the sector’s unmet infrastructure needs, including a maintenance backlog and increased demand for contemporary learning and research spaces.

Base funding for universities is provided through a combination of the Commonwealth Grant Scheme and the Higher Education Loan Program (HELP) to meet the basic costs of university learning and teaching provision. This includes ‘a notional amount to meet the costs of infrastructure’. However, according to estimates prepared for the higher education base funding review report, universities had unaddressed maintenance needs estimated to be between $2.08 billion to $3.19, while growing student numbers and increased emphasis on competitive research excellence increased pressure for new or refurbished buildings and other facilities.[103] The EIF was therefore intended to provide a large-scale funding source for transformational projects which would allow Australian research and tertiary education institutions to compete effectively with international counterparts.[104]

Funding rounds for the EIF were held between 2008 and 2011 to resource a range of projects according to need and government priorities (a list of funding rounds is provided at Appendix A). Responsible Ministers made recommendations for funding projects to the Prime Minister based on advice from the EIF Advisory Board against the EIF Evaluation Criteria.[105] Over $4 billion of projects were supported, including the Transformation of Central Queensland University into a dual sector institution, a Joint Health Education Facility at Port Macquarie, the Australian Centre for Indigenous Knowledge and Education, and Australia’s involvement in the Giant Magellan Telescope project.[106]

The importance of ongoing funding akin to what had been provided by the EIF was emphasised in September 2015, when the final report of the Research Infrastructure Review found ‘[t]here is considerable concern about successive governments’ practice of funding long term investments on short term funding cycles’.[107] The report recommended the Australian Government:

…commit $3.7 billion funding [remaining from the EIF] for the Australian National Research Infrastructure Fund within the Infrastructure Growth Package and the Asset Recycling Fund … [and suggested] in all the circumstances, there are good arguments for a proposal to use the EIF balance for investment in National Research Infrastructure. It is the right amount, the funds are not being used productively and the proposal is consistent with the original intended use of the funds.[108]

While the EIF was not exclusively concerned with research infrastructure, its loss would represent a loss of ongoing capital funding, which to date, funding to maintain National Collaborative Research Infrastructure Strategy (NCRIS) facilities under the National Innovation and Science Agenda (NISA), and the National Research Infrastructure Roadmap have not addressed.[109]

In 2016, the final report of the Higher Education Infrastructure Working Group, which was established to advise the Government on the options available to the higher education sector in relation to teaching and research infrastructure, found that capital grants accounted for a higher than usual proportion of higher education infrastructure investment from 2011 to 2013 (when large-scale EIF funding was being rolled out) and also allowed institutions to leverage this funding to invest in a range of significant projects with partner organisations. Yet it also identified that capital grants, while more significant than usual during this time period, still accounted for only 18 per cent of infrastructure spending, with the majority of investment coming from institutions’ cash operating surpluses. However, the Working Group observed:

…[w]hile most universities have been well placed to fund their infrastructure investments, there are a small number of institutions that have clearly struggled… Smaller regional universities, in particular, were more dependent on capital grants for infrastructure investment. As a result they will face particular challenges adjusting their operations to either accumulate the surpluses necessary to internally finance future infrastructure, particularly large scale building construction and renewal, or to service substantial debt.

With the loss of the Higher Education Endowment Fund (HEEF) and the Education Investment Fund (EIF), established to assist universities to build world class transformative facilities, we have lost something which was designed to take our institutions to another level.[110]

Thus, the proposed abolition of the EIF appears to finalise the process of shifting ongoing responsibility for capital funding for higher education infrastructure to institutions, raising concerns in particular about the capacity of smaller and rural tertiary education providers and those with concentrations of research excellence in fields that rely on expensive specialist facilities and equipment to meet their infrastructure needs.[111]

Policy position of non-government parties/independents

Opposition/minor party views on the abolition of the EIF

Labor opposes the abolition of the EIF as a cut to higher education funding:

We're not going to support their plans to abolish the Education Investment Fund. If you compare the approach of Labor governments over decades to higher education to that of the coalition, the Liberal and National parties, you see the world through the prism of privilege. They vote accordingly. Others see the world through the prism that higher education is an opportunity to improve your lot in life. We put in place the Education Investment Fund, which improved the facilities of universities right around the country, particularly in regional campuses around the country, where millions and millions of dollars was invested, including in my own campus at Wollongong. Millions and millions of dollars was invested. What is this government attempting to do? Abolish that fund so that those funds aren't available to invest in university facilities around the country.[112]

The Jacqui Lambie Network also opposes the abolition of the EIF as a cut to higher education funding:

Now the government is looking to slash another $3.8 billion from the Education Investment Fund, from infrastructure funding. The government's rhetoric that universities can afford these cuts because they are all profiting is an absolute joke. Universities do not profit. When a university is lucky enough to post a surplus, it is invested in research infrastructure or student support programs.[113]

Position of major interest groups

As stated above, many of the submissions to the Economics Committee inquiry into the Bills were from the higher education sector expressing concerns about abolition of the EIF.

Higher Education stakeholder views on the EIF

Higher education stakeholders have reacted strongly against the proposed abolition of the EIF, with Universities Australia Chief Executive Belinda Robinson stating:

Without Commonwealth funding for new and refurbished education buildings, future students, communities and the nation will see a gradual erosion of our world-class university facilities.[114]

While peak bodies from the higher education sector that have engaged directly with the question of funding the NDIS are supportive of the Scheme, they are uniform in their rejection of the EIF as a source of funding. Many raise concerns about the impact on Australia’s learning, teaching and research capacity and international competitiveness, and point out that the EIF was intended to provide funding stability for transformational infrastructure, and should be used for that purpose in light of other Government priorities such as the NISA. For example, the Group of Eight (Go8) submission to the Senate Standing Committee on Economics inquiry into the Bills calls the loss of the EIF ‘devastating’, saying the remainder of the fund should be directed towards ongoing funding for capital investment in research infrastructure:

The Go8 strongly supports the appropriate and effective funding of the NDIS. However, Governments have choices in how to fund such landmark schemes. The Go8 contends that the Government can exercise its option not to use the remaining EIF funds for this purpose, in view of the devastating impact the loss of the EIF will have on the nation’s research capability. The use of EIF, conversely, to alleviate the cost of the NDIS can only have a temporary, short-term and relatively insignificant impact on the scheme’s budget...Our international competitiveness and reputation in higher education provision and as a research nation will be placed at risk. Benefits to industry, the Government’s Industry portfolio and innovation agenda, and other functions and priorities of government will be compromised. The loss of the EIF will significantly further compromise the higher education sector if compounded by the cuts to university funding proposed under the Government’s Higher Education Support Legislation Amendment (A More Sustainable, Responsive and Transparent Higher Education System) Bill 2017.[115]

Concerns related to regional and smaller institutions are also raised in a number of submissions. Although the Regional Universities Network (RUN) did not make a submission to the inquiry, it has indicated elsewhere that it shares the concerns expressed by the Higher Education Infrastructure Working Group about the capacity of some institutions to invest in infrastructure, despite the overall positive position of the sector:

Smaller universities have difficulty in generating sufficient cash surpluses to invest in larger scale infrastructure projects to assist them in adapting to local market conditions, improve their long-term viability and enhance the student experience. Finding funding to address deferred maintenance is also an issue. Coupled with this, less “elite” and younger universities are less able to attract substantial philanthropic funding, either to fully fund or co-invest in major teaching and/or research projects. The Education Infrastructure Fund (EIF) and the Structural Adjustment Fund (SAF) provided significant infrastructure funding to regional universities which would not have been otherwise available. Increasingly, universities need to invest in their IT infrastructure. This is partly to meet student expectations about flexible modes of delivery, as well as multiple locations and a substantial number of students studying externally. Investment in IT infrastructure is a regular call on an institution’s funds, and can be exacerbated by uncertainty of future teaching methods. IT can be difficult to obtain external borrowings for this type of investment as there is no physical asset to back the security.[116]

Financial implications

According to the Explanatory Memorandum to the Bills the closure of the BAF and the EIF as part of the 2016–17 MYEFO measure Asset Recycling Fund – not proceeding will increase revenue by $81 million over the 2016–17 Budget forward estimates period. $7.2 billion is expected to be contributed to the NDIS special account from the uncommitted balances of the BAF and the EIF.[117]

Commencement

The NBF Repeal Bill commences on the earliest of a single day fixed by proclamation, or six months after Royal Assent.

Key provisions

The Nation-building Funds Repeal Bill consists of one schedule with three parts. It has the primary purpose of repealing the Nation-building Funds Act.

Part 1 repeals the Nation-building Funds Act in its entirety, thereby abolishing both the BAF and the EIF.

Part 2 makes consequential amendments to a number of Acts which refer to the NBF Act, primarily removing references to the NBF Act in other Commonwealth Acts.

Items 2 to 4 amend the COAG Reform Fund Act 2008 to remove references to the NBF Act.

Items 5 to 6 amend the DisabilityCare Australia Fund Act 2013 to remove references to the NBF Act.

Items 7 to 28 amend the Future Fund Act 2006 to remove references to the NBF Act.

The Future Fund Board of Guardians has responsibility for managing the investments of the Building Australia Fund and the Education Investment Fund in accordance with the funds’ investment mandates.[118] The proposed amendments to the Future Fund Act will abolish the Board’s responsibilities in respect of these funds.

Item 29 amends the Health Insurance Act 1973 to note the NBF Act is repealed.

Item 30 to 33 amend the Medical Research Future Fund Act 2015 to note that the NBF Act is repealed.

Part 3 outlines the transitional provisions for the NBF Repeal Bill.

Item 34 maintains the right for the Finance Minister to require the Future Fund Board to prepare reports or provide information on matters relating to the BAF and the EIF.

Item 35 maintains that any agreement under section 179 of the NBF Act that is in place prior to the repeal of the NBF Act continues in force.  Section 179 relates to grants made from the EIF to a person other than a state or territory. However, the Minister who administers the Higher Education Support Act 2013 may vary or revoke such an agreement.

Section 63 of the Future Fund Act provides protection from civil and criminal liability for the Board members (including the Chair) of the Future Fund in relation to acts that they are required to do under relevant legislation. Section 63 is amended by item 16 to remove references to the NBF Act. Item 36 provides that, despite the amendment made by item 16, Board members retain protection for acts required by the NBF Act that they performed prior to the amendment commencing.

Item 37 provides that the Board of the Future Fund will continue to be required to provide information on debits from the BAF and the EIF in its annual report to the Minister.

Item 38 provides that miscellaneous amounts received by the Board of the Future Fund for the BAF or the EIF are not required to be credited to the Future Fund. The note to item 38 indicates that these amounts will form part of the Consolidated Revenue Fund.

Item 39 allows the Minister to make transitional rules by legislative instrument that relate to amendments in the NBF Repeal Bill. However the Minister may not create an offence or civil penalty, provide powers of arrest or detention, entry or seizure, impose a tax, appropriate amounts from consolidated revenue or directly amend the text of the NBF Repeal Act (when enacted).

Appendix A: Education Investment Fund rounds

The following Education Investment Fund funding rounds were held between 2008 and 2011:

•       round one competitive funding of $580 million announced in 2008

•       a Teaching and Learning Fund of $500 million announced in 2008, distributed to eligible universities based on domestic student load for building and upgrades of teaching and learning spaces

•       round two competitive funding of $934.2 million announced in 2009

•       the Super Science Initiative, which provided non-competitive funding of $989.4 million announced in 2009 to address space science and astronomy, marine and climate science, and future industries, three of the priorities identified in the Strategic Roadmap for Australian Research Infrastructure

•       round three competitive funding and the competitive Sustainability Round, totalling $550 million in 2010

•       a $300 million contribution to the Clean Energy Initiative to support the Solar Flagship and Carbon Capture and Storage Flagship programs launched in 2009

•       a Structural Adjustment Round launched in 2010, which allocated $200 million for infrastructure projects associated with adaptation to the demand driven funding system for domestic undergraduate university places

•       a Regional Priorities Round of $500 million competitive funding to support regional institutions, launched in 2011.[119]

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[1].              Explanatory Memorandum, Medicare Levy Amendment (National Disability Insurance Scheme Funding) Bill 2017 [and related Bills], p. 4.

[2].              P Pyburne, National Disability Insurance Scheme Savings Fund Special Account Bill 2016, Bills digest, 1, 2016–17, Parliamentary Library, Canberra, 2016.

[3].              NDIS, About the NDIS, NDIS, p. 2.

[4].              Productivity Commission (PC), Disability care and support, Inquiry report, 54, PC, Canberra, 2011, vol. 1, p. 2.

[5].              L Buckmaster, The National Disability Insurance Scheme: a quick guide, Research paper series, 2016–17, Parliamentary Library, Canberra, updated 3 March 2017, p. 1. Much of this section of the Bills Digest is sourced from this research paper.

[6].              NDIS, About the NDIS, op. cit., p. 2.

[7].              NDIS, The NDIS and mainstream interfaces, NDIS, 16 January 2014.

[8].              Buckmaster, The National Disability Insurance Scheme: a quick guide, op. cit., p. 1.

[9].              L Buckmaster and A Dunkley, ‘Fully funding’ the NDIS, in Budget review 2017–18, Research paper series, 2016–17, Parliamentary Library, Canberra, 19 May 2017, p. 112.

[10].              PC, Disability care and support, op. cit., vol. 1, p. 3.

[11].              PC, Disability care and support, op. cit., vol. 2, p. 637.

[12].              PC, Disability care and support, op. cit., vol. 1, p. 85.

[13].              PC, Disability care and support, op. cit., vol. 2, p. 637.

[14].              J Gillard (Prime Minister), Productivity Commission's final report into disability care and support, media release, 10 August 2011.

[15].              NDIS, ‘Intergovernmental agreements’, NDIS website.

[16].              PC, National Disability Insurance Scheme (NDIS) costs, position paper, June 2017, p. 328.

[17].              Senate Community Affairs Committee, Answers to Questions on Notice, Social Services Portfolio, Supplementary Estimates Hearings 2016–17, Question No: SQ16-000402; NDIA, Submission to the Joint Standing Committee on the NDIS, Inquiry regarding the provision of services under the NDIS for people with psychosocial disabilities related to a mental health condition, 2017, p. 5.

[18].              A Dunkley, ‘Mental health’, Budget review 2017–18, Parliamentary Library, Canberra, 2017, p. 73; Department of Health, Prioritising mental health—psychosocial support services—funding, The Department, Canberra, 2017.

[19].              J Gillard (Prime Minister) and W Swan (Treasurer), Medicare Levy increase to fund DisabilityCare Australia passes the Parliament, media release, 16 May 2013; Parliament of Australia, Medicare Levy Amendment (DisabilityCare Australia) Bill 2013 homepage, Australian Parliament website.

[20].              PC, National Disability Insurance Scheme (NDIS) Costs, op. cit., p. 329; Australian Government, ‘DisabilityCare Australia Fund Financials webpage’, Department of Finance website, 18 October 2017; DisabilityCare Australia Fund Act 2013 (Cth).

[21].              The amount received by state and territory governments from the DisabilityCare Australia Fund will increase at 3.5 per cent each year until 2023–24. PC, National Disability Insurance Scheme (NDIS) Costs, op. cit., pp. 328–9, 335.

[22].              L Buckmaster, The National Disability Insurance Scheme: a quick guide, op. cit., p. 4.

[23].              PC, National Disability Insurance Scheme (NDIS) costs, op. cit., chapter 10.

[24].              Ibid., pp. 47, 333–4.

[25].              Ibid., p. 327.

[26].              Pyburne, National Disability Insurance Scheme Savings Fund Special Account Bill 2016, op. cit., p. 6.

[27].              The terms of reference, submissions to the Committee on Community Affairs and the final report are available on the inquiry homepage.

[28].              Senate Community Affairs Legislation Committee, National Disability Insurance Scheme Savings Fund Special Account Bill 2016 [Provisions], 7 November 2016, p. 11.

[29].              J Macklin (Shadow Minister for Families and Social Services), Morrison can’t hold the NDIS to ransom again, media release, 9 May 2017.

[30].              C Porter (Minister for Social Services), Z Seselja (Assistant Minister for Social Services and Multicultural Affairs) and J Prentice (Assistant Minister for Social Services and Disability Services), Guaranteeing the NDIS and providing stronger support for people with disability, joint media release, 9 May 2017.

[31].              S Morrison, ‘Second reading speech: Medicare Levy Amendment (National Disability Insurance Scheme Funding) Bill 2017’, House of Representatives, Debates, 17 August 2017, p. 8825.

[32].              PC, National Disability Insurance Scheme (NDIS) costs, op. cit., p. 323.

[33].              Ibid.

[34].              Australian Government, Budget strategy and outlook: budget paper no. 1: 2017–18, pp. 3–9.

[35].              Buckmaster and Dunkley, ‘Fully funding’ the NDIS, op. cit., p. 113.

[36].              Explanatory Memorandum, Medicare Levy Amendment (National Disability Insurance Scheme Funding) Bill 2017 [and related Bills], p. 8.

[37].              Ibid, p. 4.

[38].              For example, levies under the Primary Industries (Excise) Levies Act 1999.

[39].              The terms of reference, submissions to the Committee on Economics and the final report are available on the inquiry homepage.

[40].              Senate Economics Legislation Committee, Medicare Levy Amendment (National Disability Insurance Scheme Funding) Bill 2017 and 10 related bills [provisions], The Senate, Canberra, 16 October 2017, pp. 26–27.

[41].              Disabled People’s Organisations (DPO) Australia, Australian Federation of Disability Organisations (AFDO) and Australian Council of Social Services (ACOSS), We call on this Parliament to deliver secure, sustainable and sufficient funding for the National Disability Insurance Scheme, media release, 23 July 2017.

[42].              AFDO, Submission to Senate Standing Committee on Economics, Inquiry into the Medicare Levy Amendment (National Disability Insurance Scheme Funding) Bill 2017 and 10 Related Bills [Provisions], September 2017; G Chan, ‘Labor using NDIS and Medicare levy “to play politics”, disability groups say’, The Guardian, 15 May 2017.

[43].              National Disability Services, Submission to Senate Standing Committee on Economics, Inquiry into the Medicare Levy Amendment (National Disability Insurance Scheme Funding) Bill 2017 and 10 Related Bills [Provisions], September 2017.

[44].              Ibid.

[45].              ACOSS, Submission to Senate Standing Committee on Economics, Inquiry into the Medicare Levy Amendment (National Disability Insurance Scheme Funding) Bill 2017 and 10 Related Bills [Provisions], 7 September 2017.

[46].              Ibid., pp. 1, 19.

[47].              DPO Australia, Submission to Senate Standing Committee on Economics, Inquiry into the Medicare Levy Amendment (National Disability Insurance Scheme Funding) Bill 2017 and 10 Related Bills [Provisions], September 2017, p. 3.

[48].              Australian Nursing and Midwifery Federation, Submission to Senate Standing Committee on Economics, Inquiry into the Medicare Levy Amendment (National Disability Insurance Scheme Funding) Bill 2017 and 10 Related Bills [Provisions], September 2017, p. 2.

[49].              Ibid., p. 3.

[50].              Children and Young People with Disability Australia (CYDA) and Young People in Nursing Homes National Alliance (YPINHNA), Submission to Senate Standing Committee on Economics, Inquiry into the Medicare Levy Amendment (National Disability Insurance Scheme Funding) Bill 2017 and 10 Related Bills [Provisions], September 2017, p. 5.

[51].              YPINHNA, Submission to the Senate Standing Committee on Community Affairs, Inquiry into the National Disability Insurance Scheme Savings Fund Special Account Bill 2016, October 2016, pp. 2–3.

[52].              CYDA and YPINHNA, Submission to Senate Standing Committee on Economics, Inquiry into the Medicare Levy Amendment (National Disability Insurance Scheme Funding) Bill 2017 and 10 Related Bills [Provisions], op. cit., p. 2.

[53].              Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 10, 2017, The Senate, Canberra, 6 September 2017, p. 19.

[54].              The Statement of Compatibility with Human Rights can be found at pages 18-24 and page 31 of the Explanatory Memorandum to the Bills.

[55].              Parliamentary Joint Committee on Human Rights, Scrutiny report, 9, 2017, 5 September 2017, p. 83.

[56].              Australian Government, Budget measures: budget paper no. 2: 2017–18, pp. 24–25.

[57].              Australian Taxation Office (ATO), 'Medicare levy exemption’, ATO website, last modified 7 July 2017.

[58].              ATO, ‘Medicare levy reduction for low income earners’, ATO website, last modified 29 June 2017.

[59].              ATO, ‘Medicare levy reduction – family income’, ATO website, last modified 29 June 2017.

[60].              For example, the Treasury Laws Amendment (Medicare Levy and Medicare Levy Surcharge) Act 2017.

[61].              A Biggs, 'A short history of increases to Medicare levy’, FlagPost, Parliamentary Library blog, 3 May 2013.

[62].              Parliament of Australia, ‘Medicare Levy Amendment (Disability Care Australia) Bill 2013 homepage’ Australian Parliament website.

[63].              Biggs, op. cit.

[64].              Senate Economics Legislation Committee, Inquiry into the Medicare Levy Amendment (National Disability Insurance Scheme Funding) Bill 2017 and 10 related bills, The Senate, Canberra, 16 October 2017, p. 27.

[65].              C Gribbin, ‘Bill to hike Medicare levy to raise $8 billion NDIS funding set to face Parliament’, ABC News online, 17 August 2017.

[66].              Explanatory Memorandum Medicare Levy Amendment (National Disability Insurance Scheme Funding) Bill 2017 [and related Bills], p. 4.

[67].              Item 4 of the Medicare Levy Amendment Bill.

[68].              Medicare Levy Act, subsection 6(1).

[69].              Medicare Levy Act, subsections 6(2) and 6(3).

[70].              Medicare Levy Act, subsections 6(4)-(6).

[71].              The family income threshold is set under subsections 8(5)-8(7) of the Medicare Levy Act and is currently $36,541 (or $47,670 if the individual is eligible for SAPTO) and increases by $3,356 per dependent.

[72].              Fringe Benefits Tax Act, section 5.

[73].              Fringe Benefits Tax Act, section 6.

[74].              ATO, Fringe benefits tax – rates and thresholds, ATO website, last modified 15 September 2017.

[75].              Section 295-610 of the Income Tax Assessment Act 1997 provides that no-TFN contributions relate to contributions to a superannuation fund by a person who has not provided the fund with their Tax File Number.

[76].              The cap is set by Subdivision 292-C of the ITAA 1997.

[77].              Australian Taxation Office (ATO), ‘Receiving member roll-over requests’, ATO website, last modified 8 September 2015.

[78].              ITAA 1997, section 306-1.

[79].              ITAA 1997, section 306-10.

[80].              ITAA 1997, section 307-350 sets out the cap amount.

[81].              ITAA 1997, section 995-1.

[82].              Tax liability where family trust makes distribution outside a family group.

[83].              Tax liability where interposed trust makes distribution outside a family group.

[84].              Tax liability where interposed partnership makes distribution outside a family group.

[85].              Tax liability where interposed company makes distribution outside a family group.

[86].              Notice requiring information about non-resident distributions.

[87].              Australian Taxation Office (ATO), ‘Share capital account tainting’, ATO website, last modified 1 December 2016.

[88].              S Morrison (Treasurer) and M Cormann (Minister for Finance), Mid-year economic and fiscal outlook 2016-17, December 2016, p. 157.

[89].              R Webb, C Dow and R de Boer, Nation-building Funds Bill 2008, Bills digest, 67, 2008–09, Parliamentary Library, Canberra, 2008.

[90].              J Murphy and D Brett, Medical Research Future Fund Bill 2015 [and] Medical Research Future Fund (Consequential Amendments) Bill 2015, Bills digest, 3, 2015–16, Parliamentary Library, Canberra, 2015.

[91].              Nation-building Funds Act 2008 (as made), sections 16 and 17.

[92].              Nation-building Funds Act 2008 (as made), section 133; Nation-building Funds (Consequential Amendments) Act 2008.

[93].              Department of Finance (DoF), Nation-building funds financials, DoF website, last updated 18 October 2017.

[94].              Senate Standing Committee on Economics, Inquiry into the Nation-building Funds Bill 2008 [Provisions], Nation-building Funds (Consequential Amendments) Bill 2008 [Provisions] and COAG Reform Fund Bill 2008 [Provisions], The Senate, Canberra, 2008, pp. 1–2, accessed 13 September 2017.

[95].              National Commission of Audit, Towards responsible government, Phase 2, section 2.4 Commonwealth funding to state and local governments for infrastructure, 2014, pp. 31–32.

[96].              Australian Government, Budget measures: budget paper no. 2: 2014–15, p. 114–115.

[97].              Department of Finance (DoF), Nation-building funds financials, DoF website, last updated 18 October 2017.

[98].              DoF, ‘Nation building funds: building Australia fund’, DoF website, last updated 18 October 2013.

[99].              BAF Evaluation Criteria

[100].              DoF, Building Australia Fund – approved projects, DoF website.

[101].              National Commission of Audit, op. cit., p. 31.

[102].              Section 131, Nation-building Funds Act 2008 (Cth); Australian National Audit Office (ANAO), Agency management of special accounts, Audit report, 24, 2003–04, ANAO, Barton, ACT, 2004; Department of Finance, ‘Special appropriations: special accounts’, DoF website, provides the following definition: ‘A special account is a limited special appropriation that notionally sets aside an amount that can be expended for listed purposes. The amount of appropriation that may be drawn from the CRF [Consolidated Revenue Fund] by means of a special account is limited to the balance of each special account at any given time.’ The EIF Special Account is operated through two Portfolio Special Accounts, the EIF Education Portfolio Special Account and the EIF Research Portfolio Special Account.

[103].              Higher Education Base Funding Review [Panel]: final report, [Department of Education, Employment and Workplace Relations, Canberra], 2011, p. 45 and 84–85.

[104].              Australian National Audit Office (ANAO), Administration of Grants from the Education Investment Fund: Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education, Audit report, 37, 2012–13, ANAO, Barton, ACT, 2013.

[105].              Ibid.

[106].              Finance, ‘Education investment fund – approved projects’, Finance website; Central Queensland University (CQ University), ‘Dual sector university decision will transform central Queensland’, CQ University website; University of New South Wales, Sydney (UNSW Sydney), ‘Joint health education facility – Port Macquarie: expanding medical education opportunities in regional Australia’, UNSW Sydney website; Charles Darwin University (CDU), ‘Australian Centre for Indigenous Knowledge and Education’, CDU website; Australian Giant Magellan Project Office, ‘Giant Magellan telescope information’, Australian Giant Magellan Project Office website.

[107].              Research Infrastructure Review, Research Infrastructure Review: final report, 10 September 2015, p. 3.

[108].              Ibid., pp. viii, 30 and 32.

[109].              Department of Education and Training (DET), ‘National collaborative research infrastructure strategy (NCRIS)’, DET website; Department of Education and Training (DET), ‘2016 National research infrastructure roadmap’, DET website, last modified 12 May 2017.

[110].              Research Infrastructure Review, Research Infrastructure Review: final report, op. cit., pp. 18–21.

[111].              While the trend toward ‘roll in’ of infrastructure funding for learning and teaching purposes has been long-running, the opposite trend has emerged in research funding, with the need to address the cross-subsidisation of research from learning and teaching. A history of government capital infrastructure funding is provided at pp.40–42 of P M Clark, Research Infrastructure Review: final report, Department of Education and Training, Canberra, 5 September 2015.

[112].              S Jones, ‘Second reading speech: Higher Education Support Legislation Amendment (A More Sustainable, Responsive and Transparent Higher Education System) Bill 2017,’ House of Representatives, Debates, 12 September 2017, p. 10,086.

[113].              J Lambie, ‘Questions without notice: higher education’, Senate, Debates, 12 September 2017, p. 6957.

[114].              Universities Australia (UA), ‘We can’t afford to lose the education investment fund’, UA website, 23 February 2017.

[115].              Group of Eight (Go8), Submission to the Senate Standing Committee on Economics, Inquiry into the Medicare Levy Amendment (National Disability Insurance Scheme Funding) Bill 2017 and 10 related bills [provisions], 8 September 2017, pp.2–3.

[116].              Regional Universities Network (RUN), ‘Submission to driving innovation, fairness and excellence in Australian higher education’, 2016, p. 9, RUN website.

[117].              Explanatory Memorandum Medicare Levy Amendment (National Disability Insurance Scheme Funding) Bill 2017 [and related Bills], p. 5.

[118].              Future Fund, ‘Our funds’, Future Fund website.

[119].              Summarised from ANAO, Administration of Grants from the Education Investment Fund, Audit report, 37, 2012–13, ANAO, Barton, ACT, 2013, p. 114. The 2008 round was funded from the EIF, and is often referred to as the first round of EIF funding, however the round was launched and assessed under the predecessor Higher Education Endowment Fund Act 2007. A full account of the EIF funding components prepared by the Department of Finance is available at Finance, ‘Education investment fund – approved projects’, Finance website.