2.1
This chapter outlines the key issues considered by the Senate Economics Legislation Committee (the committee) at its 2021-22 Budget estimates hearings with the Treasury Portfolio and Industry, Science, Energy and Resources Portfolio (Industry Portfolio).
2.2
It should be noted that over the four days of hearings, a number of senators raised the inadequacy of questions on notice responses from the previous round of hearings—Additional estimates 2020-21.
Treasury Portfolio, 1 June 2021
Department of the Treasury
Macroeconomic Group, Corporate and Foreign Investment Group
2.3
The Secretary of the Department of the Treasury, Dr Steven Kennedy PSM, made an opening statement, firstly outlining the international and domestic economic situation, before discussing economic recovery, the labour market including an update on the JobKeeper transition, budget assumptions and fiscal policy.
2.4
Topics examined by the committee included:
private sector business investment expectations (p. 9)
pandemic related budget assumptions including vaccines and estimating lockdowns (pp. 9–14, 21–22, 25–30)
wages growth and superannuation in the budget (pp. 14–15)
inflation, prices and working paper 'Estimating the NAIRU in Australia' (pp. 15–17)
wealth inequality (pp. 17–19)
budget assumptions around the rate of international travel (pp. 19–20)
no budget assumptions for quarantine programs (pp. 21–22)
support for Victorians (pp. 22–23)
unemployment rate and securing employees (pp. 23–24)
response to question on notice AET096 on the impact of the European Union's proposed carbon border adjustment mechanisms on Australian exports (pp. 30–31)
impact of rising house prices on people who rent and low and middle income earner tax offsets (LMITO) (pp. 31–32)
breakdown of people on JobKeeper who have lost employment (p. 32)
employed classification and related statistics (p. 33)
relying on increased consumer spending (pp. 33–34)
main programs and measures that contribute to non-mining private sector investment and growth (p. 34)
employment growth (pp. 34–35)
public sector wage increases (p. 35)
jobs lost from the Victorian lockdown May/June (pp. 35–36)
Foreign Investment Division
2.5
Topics examined by the committee included:
Port of Newcastle—98-year lease with company half-owned by a Chinese state-owned corporation involved in the Belt and Road Initiative and coal exports (pp. 36–38)
applications submitted during the period when the monetary screening threshold was lowered to zero and in the period since January 2021 by—volume, blocked, sector, processing time and responding to concern (pp. 39–41)
derivation of information in the Department of Foreign Affairs and Trade league table (p. 42)
Fiscal Group
2.6
Topics examined by the committee included:
relative importance of migration in terms of driving the population figures (pp. 42–44)
commencement of budget repair (pp. 45–46)
information in the Women's Budget Statement—gender impact (pp. 46–48)
preparation of the Women's Economic Security Statement (pp. 49–53)
outstanding questions on notice AET012, AET014 and AET015—examination of the discount rate (pp. 53–55)
analysis from Parliamentary Budget Office on returning JobKeeper from profitable companies (pp. 55–58)
Administrative Arrangement Order (AAO), responsibilities and new appointments in relation to women (pp. 58–59)
HomeBuilder—incomplete applications, deleted applications (pp. 59–60)
new National Agreement for Skills and Workforce Development (pp. 61–63)
Government's response to the Aged Care Royal Commission in the budget (pp. 63–64)
specific measures—applying a consistent four-year newly arrived residents waiting period across payments, childcare program (pp. 65–66)
JobMaker Hiring Credit—the number of people employed, amount paid out, feedback, advertising, writing to registered businesses, categories of employees (pp. 67–70)
Markets Group
2.7
Topics examined by the committee included:
reinsurance pool for cyclones and related flood damage (pp. 70–74, 96–97)
Your Future Your Super Bill—Regulation Impact Statement particularly writing to members, performance test, data for administration fee benchmarking test, Treasurer's power to deem a payment illegal, estimates of underperforming MySuper and choice products, methodology underpinning the benchmarks (pp. 74–80)
Greensill Capital—teleconferences (pp. 80–83)
National Access Regime consultation—impact on arbitration proceedings, Port of Newcastle, removing merits review (pp. 83–87)
consulting on and improving the regulation of proxy advice (pp. 87–89)
Consumer Data Standards—conflict of contractors hired (pp. 89–90)
small business policy and programmes moved to Treasury under new AAO (pp. 91–92)
funding allocations for supporting small business (pp. 92–94)
small business insurance and tourism industry (pp. 94–97)
Australian Small Business and Family Enterprise Ombudsman (ASBFEO)
2.8
The Ombudsman of the ASBFEO, Mr Bruce Billson, made an opening statement outlining his activities during his first few months in the role, then provided statistics on small businesses and noted issues for small businesses: impairment of recovery from COVID-19 economic hit; impact of shutdowns on access to finance; and insurance.
2.9
Topics examined by the committee included:
key issues affecting businesses and how ASBFEO can help (pp. 99–100, 114)
insurance—small businesses impacted by unforeseen events, informing the Minister and policy solutions (p. 101)
ASBFEO Ombudsman attending Liberal or National Party events and party membership (p. 102)
transfer of small business policy and programmes from Industry to Treasury (p. 102)
funding allocation for the office of the Ombudsman (pp. 102–103)
request for staffing—data analytics—and staff numbers (p. 103)
reference to small business in the budget papers (p. 104)
number of small business complaints and queries the office is expecting to deal with during 2021-22 (p. 104)
franchising changes (p. 105)
review of the ASBFEO (pp. 106–108)
first meeting of new Ombudsman and the new Minister (pp. 106–107)
digital economy funding in budget for small business (p. 108)
consultation with small businesses on 2020-21 budget (p. 109)
Zara Clothing Brand—wage underpayments—digital economy funding allocation for small business (pp. 108–109)
small businesses that filed for insolvency (p. 109)
labour and skills shortages in regional Australia (p. 110)
complaints about recruitment and an increase in JobSeeker applications with the return to mutual obligation arrangements (pp. 110–111)
analysis on the impact of the pandemic and natural disasters on the cost of small business insurance premiums, consultation on small business needs as part of the development of the cyclone-related funding reinsurance pool and provision of advice on the difficulty small businesses face in securing reinsurance as a result of the pandemic (p. 111)
advocating for tax reforms (p. 112)
reducing industrial relations complexity for small business (p. 113)
relationship of ASBFEO and Fair Work Ombudsman (p. 113)
feedback from small business about the Fair Work system (p. 114)
role and powers of the Ombudsman (pp. 114–115)
work on identifying opportunities for small business (p. 115)
impact of circuit-breakers on small business (pp. 115–116)
Productivity Commission
2.10
The topic examined by the committee was:
policy analysis and reports on climate change including quantifying the impact of carbon dioxide (pp. 116–117)
Inspector-General of Taxation and Taxation Ombudsman (IGTO)
2.11
The Ombudsman of the IGTO, Ms Karen Payne, tabled an opening statement highlighting updates: Taxation Complaint Investigations team; release of report A Report on aspects of Australian Taxation Office's administration of JobKeeper and Boosting Cash Flow Payments for new businesses; two review investigations underway; and the register of potential investigations.
2.12
Topics examined by the committee included:
update on progress of report on the issue of tax debt (pp. 117–118)
Treasury Portfolio, 2 June 2021
Department of the Treasury
Revenue Group, Australian Taxation Office
2.13
The Commissioner of the Australian Taxation Office (ATO), Mr Chris Jordan AO, made an opening statement which included updating the committee on a major program of work the ATO has undertaken: the new Australian Business Registry Services.
2.14
Topics examined by the committee included:
registry services role (p. 6)
stage 3 tax cuts (pp. 6–9, 29–30)
taxpayers in each income tax bracket and breakdowns (pp. 9–10)
small business tax debt breakup (p. 11)
ACN 154 520 199 Pty Ltd (in liquidation) v Commissioner of Taxation—ATO’s failed application for leave to appeal to the High Court of Australia, adjudicating matters first (pp. 11–12)
Foreign Account Tax Compliance Act (pp. 12–14)
Budget Paper No. 1, Table 5.11, p. 153 (pp. 14–15)
ATO providing an aggregated amount of income tax paid by Australia's billionaires (p. 15)
data on companies that received JobKeeper and returned a profit (pp. 15–16)
Petroleum Resource Rent Tax (pp. 16–17, 31–33)
research and development (R&D) tax incentive (pp. 19–23)
tax scam across the Kimberley region of north Western Australia (pp. 23–25)
Garnishee powers—Opening statement 23 October 2019 (pp. 25–26, 35–36)
Appeal—Carter v Commissioner of Taxation (pp. 26–28)
intergenerational report release date (pp. 28–29)
Company tax receipts—Budget Paper No. 1, Statement 5, p. 148 (p. 30)
temporary expensing (pp. 30–31)
parents paying child support lodging tax returns (pp. 34–35)
continuation of the seven-day lockdown in Victoria and federal government assistance (pp. 35–39)
update on Tax Avoidance Task Force (pp. 39–40)
taxing digital services (pp. 40–42)
Australian Charities and Not-for-Profits Commission (ACNC)
2.15
The Commissioner of the ACNC, Dr Gary Johns, provided some opening remarks listing the regional charities he has recently visited.
2.16
Topics examined by the committee included:
amendments to Governance Standard 3—regulations, charities having status revoked, concerns, submission by ACNC Advisory Board, consultation (pp. 43–45, 47–48)
application made by Australians for Indigenous Constitutional Recognition Ltd (p. 46)
RSPCA Australia and RSPCA Queensland (pp. 48–49)
monitoring financial transactions between Australian registered entities and their international associates (p. 49)
news reports about the Church of Scientology having an increase in assets at the same time membership is falling (pp. 49–50)
Australian Securities and Investments Commission (ASIC)
2.17
The Chair of ASIC, Mr Joe Longo, made an opening statement stating that as the newly appointed Chair he is beginning by understanding where ASIC is at and in his first few months will be engaging widely to shape and develop ASIC's longer-term strategy.
2.18
Topics examined by the committee included:
background of the new Chair (p. 51)
proxy adviser practices over recent years (pp. 51–53)
ASIC media release on not using a product intervention order for the sale of motor vehicle add-on insurance or extended warranty products (pp. 53–54)
accountability of Australian Financial Complaints Authority (pp. 54–55)
regulatory role on cryptocurrency (p. 55)
relationship between The New Daily and AustralianSuper Fund (pp. 55–56)
payment of regulatory fines (p. 56)
ASIC issues information sheet on activist short selling in Australia (pp. 56–58)
responsible lending obligations (pp. 58–59)
expectations of companies reporting JobKeeper (pp. 59–60)
availability of data and challenges in the absence of data (pp. 61–62)
short selling issue (p. 62)
enforcement actions since the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (pp. 62–64)
Australian Commission for Law Enforcement Integrity expanded its jurisdiction to include ASIC (p. 64)
ongoing regulatory change to financial advice sector (pp. 64–66)
Australian Prudential Regulation Authority (APRA)
2.19
The Chair of APRA, Mr Wayne Byres, made an opening statement explaining a change of leadership, progress in superannuation oversight, two new releases—draft Climate Change Financial Risk Prudential Practice Guide and draft guidance on meeting updated prudential standard on remuneration. He noted that whilst 'the Australian financial system remains fundamentally sound and stable … there are currently some very significant forces at play'.
2.20
Topics examined by the committee included:
update on the current levels of household borrowing through APRA regulated entities (pp. 66–67)
refreshed Prudential Standard APS220 standard (p. 67)
extension of Heatmaps to Choice products—comparison to MySuper products (pp. 67–69)
Maritime Super and Hostplus (pp. 69–70)
Advertising review—Greg Combet advertisements (p. 70)
The New Daily issues (pp. 71–72)
review of the sole purpose test (p. 72)
banks meeting responsible lending criteria following Hayne Royal Commission—climate (pp. 73–74, 76–77)
correspondence between the committee and APRA in relation to the Australian Business Growth Fund Bill (pp. 75–76)
lending for housing (pp. 78–79)
large premium increases for existing clients with life insurance (pp. 79–80)
Headlines—'Australia's Westpac hit with a second bank regulator penalty', 'APRA takes action against Macquarie Bank' and 'APRA takes action against Bendigo and Adelaide Bank for breaching prudential standard on liquidity' (pp. 80–81)
Reserve Bank of Australia (RBA)
2.21
Topics examined by the committee included:
RBA Board meeting on 1 June 2021 (p. 82)
household savings (p. 83)
serial numbers of the gold bars (p. 86)
headline—'Weak CPI will push RBA to $150bn new bond splash in August'; and central bank reserves (pp. 88–89)
new payment platform (pp. 89–90)
Shann Memorial Lecture—record high house prices are being fuelled by ultra-easy monetary policy and this has distributional consequences—and the wealth effect (pp. 90–91)
quantitative easing (pp. 91–92)
Financial Adviser Standards and Ethics Authority (FASEA)
2.22
The Chief Executive Officer (CEO) of the FASEA, Mr Stephen Glenfield, made an opening statement providing the committee with an update on advisers sitting the exam, information about the exam and noted the consultation on the draft Code of Ethics.
2.23
Topics examined by the committee included:
FASEA exam—English as a second language, exam dates, availability of the exam, administering the exam when FASEA is abolished, results, feedback, (pp. 92–93, 94, 95–96)
continuing professional development consultation (pp. 93–94)
transferring functions, staff and funding when FASEA is abolished (pp. 94–95)
number of financial advisors dropping below 20 000 (pp. 95)
Australian Competition and Consumer Commission (ACCC) and the Australian Energy Regulator
2.24
The Chair of the ACCC, Mr Rod Sims, tabled an opening statement and gave a snapshot of the issues the ACCC is presently dealing with—consumer enforcement, competition enforcement, exemptions to the Competition and Consumer Act 2010, merger assessments, product safety issues, scams, regulatory arrangements with National Broadband Network, work in the energy sector, digital platforms, working with Treasury on the roll out of the Consumer Data Right in the banking sector, release of the Murray–Darling Basin water markets inquiry report and competition issues in the aviation sector—and noting that additional base funding has allowed the implementation of a restructure.
2.25
Topics examined by the committee included:
gambling companies trading client information (pp. 97–98)
Port of Newcastle—monopoly, regulatory oversight, National Access Regime—improving timeliness, regulatory impact statement for changes to part IIIA (pp. 98, 105)
consolidation of John Deer franchises (p. 99)
regional aviation (pp. 99–100)
refunds of flights (pp. 100–101)
gas fired power plant at Kurri Kurri and Snowy Hydro 2.0 (pp. 101–102)
Murray-Darling Basin water markets inquiry—water register (pp. 102–104)
market power—Commonwealth Bank and Little Birdie, Westpac and Afterpay (pp. 104–105)
measuring Broadband Australia program (pp. 105–106)
Fuel Security Service Payment (p. 107)
renewable estimates (p. 108)
Australian Energy Market Operator (p. 108)
Australian Bureau of Statistics (ABS)
2.26
The Australian Statistician of the ABS, Dr David Gruen, made an opening statement providing an update on preparations for the 2021 Census including outlining the enhancements that will be in place, accessibility measures and logistics.
2.27
Topics examined by the committee included:
extending the time period to complete the census (p. 109)
face to face interviews during a pandemic (p. 109)
collecting accurate data on sex and defining male and female (p. 109)
Women's Budget Statement—collecting evidence on family, domestic and sexual violence (pp. 110–111)
ABS providing a provisional classification for the Transport Asset Holding Entity as a public non-financial corporation in 2015 (pp. 111–115)
National Housing Finance and Investment Corporation (NHFIC)
2.28
Topics examined by the committee included:
Family Home Guarantee in the federal budget (pp. 115–117, 120)
KPMG report recommending that NHFIC institutionalise governance arrangements in relation to services provided by Export Finance Australia (EFA) (pp. 117–119)
new Chief Financial Officer and being a former employee of EFA (p. 118)
housing affordability crisis (pp. 120–121)
social housing (pp. 121–122)
Industry Portfolio, 3 June 2021
Department of Industry, Science, Energy and Resources
Cross-portfolio / Corporate
2.29
Topics examined by the committee included:
name changes for the department and the incurred cost (pp. 5, 11–12)
rotating ministers through the portfolio (pp. 5–8)
Machinery of Government change (pp. 7–9)
Industry policy (pp. 9–11)
senior executive changes (p. 12)
new Minister Porter's engagement with industry and briefings (p. 13)
mRNA vaccination as a priority to Minister Porter (pp. 13–14)
performance assessment of Minister Porter (p. 14)
Minister Porter on personal leave and the acting Minister during that time (pp. 14–15)
activities and engagement of Minister Porter since his appointment (pp. 15–19)
use of cloud services within the department (pp. 19–21)
Ministerial engagement with the technology sector (pp. 21–24)
vaccine domestic manufacturing strategy (including mRNA) (pp. 24–31)
Outcome 1 Program 1.1
2.30
Program 1.1: Investing in science, technology and commercialisation
2.31
Topics examined by the committee included:
monitoring Greensill Capital (pp. 31–33)
negotiations with Ferretti Group (pp. 33–36)
Whyalla steelworks, importing steel, overseas production of steel (pp. 36–38)
National Carp Control Plan (p. 39)
R&D tax arrangements (pp. 39–40)
budget cuts to science agencies (pp. 41–42)
square kilometre array (pp. 46–49)
mRNA vaccines (pp. 49–50)
Outcome 1 Program 1.2
2.32
Program 1.2: Growing innovative and competitive businesses, industries and regions
2.33
Topics examined by the committee included:
product certification (insulation) (pp. 50–52)
JAS-ANZ audits of the conformity bodies (pp. 52–55)
complaint made about Minister Porter (pp. 55–58)
launch permit applications, fees, commercial launch arrangements (pp. 59–61)
Starlink discussions (pp. 62–63)
investment in the Australian space sector and the Australian Space Agency's budget (p. 63)
planning missions to bring leading space companies into space (p. 63)
support to the launch industry (p. 64)
working with other government agencies (p. 65)
Modern Manufacturing Strategy (p. 65)
job creation and amount spent thus far (p. 65–70, 75)
consultation that led to the six manufacturing priorities that led to the Modern Manufacturing Strategy (p. 71)
not including fibre manufacturing as one of the comparative advantages (p. 72)
regional manufacturing and consultation (pp. 72–73)
impact of the end of JobKeeper on manufacturing jobs (p. 74)
positive indicators (pp. 74–75)
Modern Manufacturing Initiative—measuring success (pp. 75–79)
Artificial Intelligence Action Plan—submissions, analysis, Cooperative Research Centres (pp. 79–81)
Manufacturing Modernisation Fund—budget (pp. 81–84)
Industry Growth Centres (pp. 84–94)
Office of Industry, Innovation and Science Australia
2.34
Topics examined by the committee included:
role in facilitating the commercialisation of Australian innovation (p. 94)
money going to companies to fund their R&D (p. 95)
examples provided for effective commercialisation of government research in 2021 report (p. 95)
InnovationAus press release—Women in STEM rates a 'national emergency' (p. 95)
IP Australia
2.35
The topic examined by the committee:
Patent boxes—budget measure (pp. 95–98)
Commonwealth Scientific and Industrial Research Organisation (CSIRO)
2.36
The Chief Executive of the CSIRO, Dr Larry Marshall, made an opening statement noting the importance of commercialisation and outlining current and future projects including leading a National Artificial Intelligence Centre and the Hydrogen Industry Mission.
2.37
Topics examined by the committee included:
key priorities for CSIRO (pp. 98–99)
CSIRO's budget and external revenue (pp. 99–100)
involvement with Modern Manufacturing Strategy (p. 100)
staff—funding and employment (p. 101)
CO2 heating the atmosphere (pp. 102–103, 118–119)
scientific evidence provided to ministers about climate change (pp. 105–107)
coal markets (pp. 107–108)
edible insects report (pp. 109–111)
COVID-19 research (p. 112)
vaccines—UQ, COVAX, CEPI (pp. 112–114)
Australian Climate Service announcement in the federal budget (pp. 114–115)
use of labour hire companies (p. 116)
jobs at Data61 (pp. 116–118)
researching bat diseases with international partners (pp. 120–121)
Office of the Chief Scientist – Dr Cathy Foley AO PSM
2.38
Topics examined by the committee included:
number of people with STEM training and STEM workforce (pp. 121–122)
commercialising research (pp. 122–123)
practical application of research gathered through funding for Square Kilometre Array (p. 124)
sovereign capability in mRNA production capacity (p. 124)
allocation of funding and staffing (p. 125)
Horizon Scanning report (p. 125)
scientific evidence provided to politicians about climate change (p. 125)
Rapid Research Information Forum—the most promising vaccines for COVID-19—involvement, Vaxine Pty Ltd option, ferret tests (pp. 126–128)
Industry Portfolio, 4 June 2021
Geoscience Australia
2.39
Topics examined by the committee included:
offshore resource extraction, production reporting and confidentiality (pp. 6–7)
management of tenements across state and territory boundaries (p. 8)
reporting on status of petroleum wells (pp. 8–9)
Outcome 1 Programs 1.3 and 1.4
2.40
Program 1.3: Supporting a strong resources sector
2.41
Topics examined by the committee included:
coal exports including to China (pp. 9–19)
feedback that changes to the coal prices are having an impact on higher cost producers (pp. 11–12)
production data for offshore oil and gas (pp. 19–20)
Critical Mineral Facilitation Office
organisation, funding, initiatives and work program (pp. 20–22)
progress on ethical certification, hubs and precincts and other initiatives (pp. 22–24)
international and domestic companies extracting minerals (pp. 24–25)
identifying capability gaps in critical minerals industries (p. 25)
National Offshore Petroleum Titles Administrator / Offshore Resources branch
production sites data and confidentiality (pp. 43–45)
sunset clause and policy review (p. 44)
optimal resource recovery (pp. 44–45)
boundary negotiations between Australia and Indonesia, complicated by negotiations between Indonesia and East Timor (p. 45)
commercial proposals received by taskforce (pp. 46–47)
turnover of the Head of Division (pp. 47–48)
selecting Mr Walker for the Walker Review (p. 51)
Walker Review inquiring into United Parcel Service's role (p. 51)
Engagement with industry about the levy (p. 52)
2.42
Program 1.4: Growing a stronger Northern Australian economy
2.43
The CEO of the Northern Australia Infrastructure Fund (NAIF), Mr Chris Wade, made an opening statement providing an update on activities since NAIF's last appearance at estimates including its performance, projects, extension of mandate and reforms, indigenous outcomes and revenue and cost management.
2.44
Topics examined by the committee included:
Office of Northern Australia (ONA)
Advisory Group on Northern Australia past and future arrangements, and work undertaken (p. 26)
ONA's budget funding for initiatives recommended by the Advisory Group and other budget funding measures (pp. 27–28)
current Northern Australia initiatives (p. 28)
arrangements for and work of the Ministerial Forum on Northern Australia and Northern Australia Indigenous Reference Group (pp. 29–32)
projects that have reached the investment decision stage, drawing down funds (pp. 32–35)
Chair—recruitment, salary (pp. 35–37)
decision of the Minister to veto a loan approved by the NAIF board for energy project in far north Queensland (the Kaban Wind farm) (pp. 37–42)
bullying complaints of NAIF staff (p. 43)
National Offshore Petroleum Safety and Environmental Management Authority
2.45
Topics examined by the committee included:
who the regulator is of the Northern Endeavour (pp. 48–49)
inspections on the Northern Endeavour (p. 49)
certification of the vessel from Lloyds (pp. 49–51)