Chapter 2 - Appropriation (Nation Building and Jobs) Bill (No. 1) 2008-2009 and Appropriation (Nation Building and Jobs) Bill (No. 2) 2008-2009
Purpose of the Appropriation (Nation Building and Jobs) Bill (No. 1)
2008-2009
2.1
The primary purpose of the Appropriation (Nation Building and Jobs) Bill
(No. 1) 2008-2009 is to propose appropriations from the Consolidated Revenue
Fund for the ordinary annual services of the Government in relation to the
Government's Nation Building and Jobs Plan.
2.2
The bill appropriates a total of $89 million, comprising $39 million to
the Department of Environment, Water, Heritage and the Arts for energy
efficiency measures and $50 million to the Australian Taxation Office to
administer the Tax Bonus for Working Australians component of the Government's
economic stimulus package.
2.3
The bill gives effect to the Energy Efficient Homes program component of
the Nation Building and Jobs Plan. Under this program, which will run from 1
July 2009 until 31 December 2011, the Government will offer to install ceiling
insulation of up to $1600 in value in all uninsulated owner-occupied homes.
According to the Minister's second reading speech, this will invest $2.7
billion in housing modernisation by the end of 2011 and result in the
insulation of almost all Australian homes.
2.4
As a further part of the Energy Efficient Homes program, the bill also
enhances two existing energy efficiency programs:
- under the Low Emissions Plan for Renters, there will be an
increase in the maximum rebate (from $500 to $1000) until 30 June 2011 for landlords installing insulation in an uncapped number of rental homes. The
Government will provide additional funding of $612.5 million under this new
arrangement; and
- it is proposed to increase—from $1000 to $1600—the Solar Hot Water
Rebate for those households that do not access the insulation program and that
replace existing electric hot water systems with a solar and heat pump hot
water system before 30 June 2012. There will no longer be a means test limiting
access to this rebate. Additional funding for this program is $507 million.
2.5
In his second reading speech, the Minister highlighted a dual policy
purpose to these programs of targeting climate change and supporting jobs:
The Energy Efficient Homes program will see an additional $3.9
billion invested in the fight against climate change and delivers on the
Government's household energy efficiency commitments in the Carbon Pollution
Reduction Scheme White Paper.
...
This investment in energy efficiency will modernise Australia's
existing housing stock and contribute to meeting Australia's 2020 target for
emissions reductions.
In addition to long-term environmental benefits, this package
supports the jobs of tradespeople and other workers employed in the
manufacturing, distribution and installation of ceiling insulation and solar
and heat pump hot water systems.[1]
2.6
The bill also contains enabling funding to ensure timely delivery of
one-off tax bonus payments to working Australians.
Outline of the Appropriation (Nation Building and Jobs) Bill (No. 1)
2008-2009 Bill
Part 1—Preliminary
2.7
Part 1 of the Bill (Clauses 1 to 5) sets out definitions, the role of
portfolio statements in interpretation of the bill, and the treatment of
notional payments.
Part 2—Appropriation items
2.8
Clause 6 summarises the total of the appropriations in Schedule 1 of the
bill and also identifies that these amounts may be altered under provisions in
Part 3 of the bill or in accordance with sections 30 to 32 of the Financial
Management and Accountability (FMA Act).
2.9
Clause 7 proposes appropriations for departmental items in the amounts
set out in Schedule 1, while clause 8 proposes appropriations for administered
items.
2.10
Clause 9 provides for appropriations for Commonwealth Authorities and
Companies Act (CAC Act) bodies to be paid from the Consolidated Revenue Fund by
the relevant department.
Part 3—Adjusting appropriation
items
2.11
Clause 10 sets out the conditions under which departmental items may be
reduced. Similarly, clause 11 specifies the circumstances in which administered
items may be reduced, and clause 12 addresses adjustments in payments to CAC
Act bodies.
Part 4—Miscellaneous
2.12
Clause 13 of the bill deals with credits to special accounts (as defined
in the FMA Act). Clause 14 of the bill notes that, in addition to the adjustment
provisions found in Part 3, appropriations in the bill may be adjusted in
accordance with the FMA Act.
Schedule 1
2.13
Finally, Schedule 1 sets out the total appropriations in the bill ($89
million).
Purpose of the Appropriation (Nation Building and Jobs) Bill (No. 2)
2008-2009
2.14
The primary purpose of the Appropriation (Nation Building and Jobs) Bill
(No. 2) 2008-2009 is to propose appropriations from the Consolidated Revenue
Fund for services in relation to the Government's Nation Building and Jobs Plan
that are not ordinary annual services of the Government.
2.15
The Appropriation (Nation Building and Jobs) Bill (No. 2) 2008-2009 appropriates
a total of about $1727 million, as follows:
- $987.2 million for the Department of Education, Employment and
Workplace Relations under the Building the Education Revolution program;
- $260 million for the Department of Families, Housing, Community
Services and Indigenous Affairs for social housing; and
- $480 million to the Department of Infrastructure, Transport,
Regional Development and Local Government for repairs to national highways,
installation of boom gates at rail crossings, the Black Spot program, and the
Regional and Local Community Infrastructure Program: Strategic Projects
program.
2.16
These monies are to be paid to the States, Territories and local
governments as specific purpose payments.
Funding for schools
2.17
The Building the Education Revolution program is a $14.7 billion
initiative with three key programs:
- Primary Schools for the 21st Century provides $12.4
billion over three years for upgrading or building major infrastructure such as
multipurpose hall and libraries. Both government and non-government primary
schools are eligible to compete for the available funds, with priority being
given to those schools building new facilities;
-
Science and Language Centres for 21st Century
Secondary Schools provides $1 billion over three years for the construction of
up to 500 science laboratories or language learning centres. Both government
and non‑government schools are eligible to apply for this funding, which
will be allocated on the basis of demonstrated need and capacity to complete
the project by 30 June 2010; and
- Renewing Australian Schools will allocate $1.3 billion for all
Australian schools to undertake maintenance and minor building works. Funding
caps will be determined by school size.[2]
2.18
In his second reading speech the Treasurer described this component of
the Government's economic stimulus package as 'the largest and most ambitious
school modernisation program in Australian history...the centrepiece of our Nation
Building and Jobs Plan.'[3]
He emphasised that the program would be wide-reaching, with the potential to
benefit each of Australia's 9540 schools.
Funding for social housing
2.19
Under the Commonwealth Social Housing Initiative, up to $6 billion will
be provided for the construction of approximately 20 000 dwellings by December
2010. Around $400 million will also be allocated for the repair of currently
uninhabitable public houses. As noted by the Treasurer:
Improving the supply of affordable housing is a key part of
achieving the government's goal of halving the level of homelessness by 2020.
Across Australia, individuals and families in the bottom 40 per
cent of earners are struggling to find affordable housing.
For these people the social housing system is a key element of Australia's
social safety net.[4]
Community infrastructure
2.20
An additional $500 million is to be provided over two years to support
large local government strategic projects. Examples include community
infrastructure such as halls, community centres and sport and recreation
facilities. This is in addition to funding announced at the Australian Council
of Local Governments in November 2008.[5]
2.21
There is also funding in the bill to improve land transport infrastructure.
It appropriates $150 million to repair regional links on the national highway,
and it appropriates $150 million over two years to improve road and rail safety
through the installation of boom gates at rail crossings (prioritised on the
basis of a safety risk assessment).
2.22
In addition, the bill appropriates a further $90 million over two years
for the existing road safety Black Spot program which aims to identify and
remedy dangerous Australian road locations. This is on top of increased funding
for this program announced under the Government's 12 December 2008 Nation Building Package.[6]
2.23
According to the Treasurer's second reading speech, these components of
the bill help to meet a 'desperate need' for upgraded infrastructure in
Australian communities and will enhance the safety of both motorists and
passengers.
Outline of the Appropriation (Nation Building and Jobs) Bill (No. 2)
2008-2009
Part 1—Preliminary
2.24
Part 1 of the bill (Clauses 1 to 5) sets out definitions, the role of
portfolio statements in interpretation of the bill, and the treatment of
notional payments.
Part 2—Appropriation items
2.25
Clause 6 summarises the total of the appropriations in Schedule 1 of the
bill and also identifies that these amounts may be altered under provisions in Part
3 of the bill or in accordance with sections 30 to 32 of the FMA Act.
2.26
The remainder of this part proposes appropriations for amounts listed in
schedule 2 to make payments to State, Territory and local government items
(clause 7), administered items (clause 8), administered assets and liabilities
items (clause 9), other departmental items (clause 10) and CAC Act body payment
items (clause 11).
Part 3—Adjusting appropriation
items
2.27
This part sets out ways in which Schedule 2 amounts may be adjusted.
Specially, Clause 12 relates to reductions in state, territory and local
government items and administered items; Clause 13 relates to reductions in
administered assets and liabilities items and other departmental items; and Clause
14 relates to reductions in CAC Act body payment items.
Part 4—Miscellaneous
2.28
Clause 15 of the bill deals with credits to special accounts (as defined
in the FMA Act). Clause 16 sets out the conditions that apply to State, Territory
and local government payment items. Clause 17 of the bill notes that, in
addition to the adjustment provisions found in Part 3, appropriations in the
bill may be adjusted in accordance with the FMA Act.
Schedule 1—Payments to or for the
States, ACT, NT and local government
Schedule 2—Services for which money
is appropriated
2.29
Schedule 1 to the bill identifies the entities, outcomes and responsible
ministers involved in payments to or for the States, Territories and local
government. The amounts that this bill will appropriate are set out in Schedule
2, to a total amount of $1727 million.
Issues
Energy Efficiency Measures
2.30
The energy efficiency measures included in the Nation Building and Jobs
Plan serve more than one purpose. In addition to the benefit to households in
the form of lower power bills and the benefit to the environment in the form of
reduced carbon emissions, the initiatives also serve to create employment and
pump extra government spending into the economy. Adj. Prof. Alan Pears
summarised some of the benefits in the following statement:
The purchases of energy efficient products, the labour involved
in installing them, in doing renovations and things like that, create jobs in
the services and light manufacturing sectors, which are the most employment
intensive sectors of the economy. Energy efficiency offers ongoing economic,
environmental and social benefits—in particular through reduced energy bills,
which effectively is the equivalent to an ongoing tax cut. It also improves
business productivity and the health of our community and reduces pressure on our
seriously stretched energy supply systems.[7]
2.31
The questioning surrounding the Energy Efficient Homes program focussed
on two main areas. Firstly, there were many questions about other initiatives
that could have been considered under the mantle of environmental measures.
Secondly, there were several questions that sought to analyse problems with the
proposed package.
2.32
The Department of Environment, Water, Heritage and Arts (DEWHA) was
asked by several senators whether other environmental measures had been considered
for inclusion in the plan. Mr Malcolm Forbes, Secretary of DEWHA, commented
that:
We provided advice with regard to energy efficiency for housing
in this particular package. Governments, in the end, have to make trade-offs
about what is going to be the best for the certain objects they are achieving.
In this particular case they made the choice that insulation was the most
effective for what they were attempting to achieve.[8]
2.33
The proposed Energy Efficient Homes program will provide up to $1600 for
ceiling insulation in all uninsulated owner-occupied homes. DEHWA was asked
about the carbon footprint of the production of the insulation required for the
program. Mr Ross Carter responded that:
We have not done calculations around the carbon footprint or
emissions. The Department of Climate Change is the department responsible for
looking at carbon emissions and doing abatement and other calculations around
that.[9]
2.34
Mr Carter also added that 'in our advice, we focused on the energy
efficiency aspects, not on the life cycle issues that might surround some of
those insulation products'.[10]
2.35
In relation to the production of the insulation, the Committee examined
whether it was produced domestically or internationally. When asked whether the
installers who were consulted on the average cost of installing insulation in
Australian homes were suggesting domestically produced or imported insulation,
Mr Carter responded that it was predominantly domestically produced insulation,
including wool, and that:
This is an averaging across a range of installation products
that include fibreglass, rock wool, natural wool, polyester, polystyrene
boards, loose fill—there is quite a range of materials.[11]
2.36
Another issue raised in regard to the program was whether the rebate
would cover the full cost of installation of insulation. DEWHA responded that
the average cost of installation estimated by the Department was $1200,
although it was not specified what size of house this was for.[12]
2.37
A further issue involved the suitability of the solar hot-water
initiative for all climates. It was suggested that an evacuated tube system,
currently not included in the rebate was more effective for the Tasmanian
climate. The response from Mr Carter was as follows:
The current proposal is to increase the rebate that is available
and remove the means test from the existing program, and the guidelines for
that do not allow for evacuated tubes. We have indicated that we will be
reviewing that program and, as I discussed with you at estimates previously,
there are some technical issues around the verification of the performance of
evacuated tubes because of the combination often with electric storage and the
difficulty in demonstrating the renewable energy certificate generation of
that. But it is an issue that we are bringing into the review of those
guidelines.[13]
2.38
One final issue covered in the hearing was concern over the omission of
aged-care facilities from the program. Mrs Wiley-Smith, DEWHA, when asked
whether these facilities were considered in the context of the package,
responded to this saying:
No. In the Low Emission Plan for Renters, we are considering as
part of that making sure that those types of sectors are eligible. That is
something that will be determined when we go through some of the consultation
processes we have planned with industry in the next few weeks.[14]
Appropriation of $50 million for
the Australian Tax Office
2.39
The Australian Tax Office (ATO) was questioned about the $50 million
provided to it by the bill. The ATO responded in a written answer that the $50
million was to fund:
- the designing, developing, building and testing of modifications
to existing IT and business systems
- expenditure associated with printing and distributing cheques and
notices of payment
- establishing a dedicated call centre to provide information about
the initiative
- giving taxpayers the opportunity to update payment preferences for
the bonus via a number of electronic and call centre channels
- expenditure associated with marketing and communications – this
includes reminders to lodge and to update details, and
- working with tax agents to develop practical steps to manage any
impacts from the payment of the tax bonus.[15]
Building the Education Revolution
2.40
The Building the Education Revolution program seeks to achieve twin goals.
On the one hand, it was designed as a social infrastructure project that could
get construction underway in a relatively short period of time, acting as a
stimulus to the economy. On the other hand, it aims to provide an education
benefit to schools, and social benefit to communities around the nation. A
variety of issues were canvassed during the hearing, with some related the design
of the scheme itself, and others related to the economic benefits it could
potentially bring in the context of the overall Nation Building and Jobs Plan.
2.41
In terms of the benefit to the schools themselves, several issues were
raised.
2.42
Firstly, it was asked whether there was actually a need for the building
and maintenance programs, and whether schools had been consulted on this
matter. Dr Nicoll replied that:
The contact that I had with states and territories identified
that there was clearly a need for investment in capital that they at this point
could not meet and that that ranged from minor infrastructure, such as that which
is going to be addressed under the national school pride program, and major
builds which are going to be addressed by the primary school element of the
program.[16]
2.43
Similarly, there was a concern raised that funding would not take into
account financial need, and thus fund projects at schools which were already
relatively wealthy. In response to this, Dr Nicoll stated:
It was a government decision that the two elements of the
program would be available to every primary school or special school or, in K
to 12, primary school program in every school in the country under the School Pride
program. There are elements about need within that. The community access point
is one where the sorts of schools you might be describing that might be
considered to be well endowed will have to make any new buildings or
refurbished buildings in their primary schools accessible by the community. The
element of need is addressed in the science and languages centres program. Up
to 500 schools that will receive new buildings will be looked at on the basis
of disadvantage and need.[17]
2.44
There was also concern that though the program would be able to fund
large infrastructure projects on the one hand, and small projects through the
maintenance fund, but would not cover middle-size projects such as shade
cloths. However the Committee heard that such projects could indeed be
considered under the program.[18]
2.45
Finally, it was asked whether schools that did not have any remaining
land upon which to build would miss out under the initiative. It was pointed
out that these schools could always refurbish existing buildings. Dr Nicoll
said:
In those cases, there is an opportunity for those schools to
refurbish an existing assembly hall, an existing library or other buildings.
Based on the sort of information that we have collected and that you would know
from your own experience in Tasmania, every school has a capacity to refurbish
some building, to improve the learning environment for students. So that is
absolutely an option for schools. We do not want the schools missing out. The
government does not want that to occur. There are common sense options for
schools to consider.[19]
2.46
In addition to the benefit to schools, the Committee heard that it was a
condition of the funding of the construction of new school buildings that they
be made available to the community at low cost. Dr Nicoll elaborated:
There is a significant community element that I have not had an
opportunity to mention but would like to. Under the Primary Schools for the
21st Century, every new school, new building or refurbished building funded
under this program must be accessible by the community at no or low cost and
that includes in the non-government sector. This is going to open up school
facilities to local communities in a way that has not occurred before as well.
So it is a very significant linking.[20]
2.47
In terms of the economic benefit of the scheme, the Committee heard that
one aim was to increase employment, and that this would be monitored through an
online portal. Dr Carol Nicoll, Department of Environment, Water, Heritage and
Arts, stated that:
Clearly there are two intents from Building the Education
Revolution. One is to provide stimulus to economies and local economies and
generate jobs. As part of that, every school that receives money under this
program, which is every school in the country, will report on an online portal
about the projects they have got and how many people were employed on those
jobs, including apprentices, so that there is a correlation between the actual
project and the number of people who were employed on that project.[21]
2.48
However, the point was raised that if the Commonwealth initiative merely
supplanted existing State and Territory initiatives, the overall economic
effect would be reduced. In response to the problem of a potential substitution
of efforts, Dr Nicoll said:
Building the Education Revolution is additional funding. As part
of the national partnership agreement that the premiers signed yesterday, it is
very clearly articulated how heads of Treasury will monitor and prevent cost
shifting. There are consequences for states and territories if cost shifting
occurs. In the areas of schools funding, I have been holding briefings with
every state and territory and every block grant authority over the last few
days and I have made it very clear that their existing capital plans and
expenditure into the forward estimates will be monitored and that it is
intended that that be maintained over the next four years. It will be a matter
of this money being additional to that.[22]
2.49
Similar evidence was heard from the Department of Families, Housing,
Community Services and Indigenous Affairs (FaHCSIA) in regards to social
housing construction, which though not in the scope of this Committee's report
is included here for comparison:
I am advised that it is the Commonwealth's intention that heads
of treasury, which is the meeting of treasury officials, will be attempting to
baseline expenditure by the states so that the money on maintenance and the
additional money for construction of social housing dwellings is clearly over
and above the states' existing efforts.[23]
2.50
In addition to issues directly related to the Building the Education
Revolution Program design, the Committee raised several issues related to the
construction measures themselves. Some of these issues were also raised in
discussion of the social housing program. Testimony from questions over social
housing has been included where it serves to further the analysis of general
construction issues.
2.51
Two issues related to the construction initiatives were the capacity of
the Australian construction industry and what standard of environmental
sustainability standards the construction would adopt.
2.52
There was some concern that with all the construction measures announced
under the Nation Building and Jobs Plan, specifically the education and social
housing initiatives, there would not be sufficient capacity in the industry to
undertake all the projects in the given timeframe. Dr Carol Nicoll outlined
some of the measures that would be undertaken to avoid this problem:
There will be introduced a governance structure that I think has
been outlined here where there is a coordinator-general in Prime Minister and
Cabinet and national coordinators in each area. Part of their job is to identify
where potential bottlenecks are occurring and to look at the challenges that
will be there in terms of ensuring there is appropriate skilled labour to
fulfil the very challenging time frames that we have got to roll these programs
out. Yes, it is quite likely there will be bottlenecks, but everything will be
done to address those, to anticipate them and to see what we can do both at the
Commonwealth and at the state and the local levels.[24]
2.53
Mr Leeper, FaHCSIA, was also asked to address the issue of capacity in
the discussion of social housing, and responded:
I point out that about 140,000 to 150,000 dwellings are completed
in Australia each year. Dwelling approvals are off by 20 per cent in the year
to December, so 20,000 dwellings over two years is not a big stretch I suggest.[25]
2.54
Later in the hearing, Mr Leeper added to this statement when responding
to a question about his discussions with the Housing Institute of Australia:
..The reduction in the number of dwelling unit approvals in the
12 months to November—I think I said it was 20 per cent—is 34.7 per cent. That
comes from the ABS catalogue Building Approvals, Australia, November 2008. That
is against an annual construction program across Australia of 140,000 to
150,000 units of housing. A 34 per cent reduction in units approved for construction
says to me that there was easily capacity, and I sought merely to confirm that
we had estimated that correctly.[26]
2.55
Another issue that was brought up during the hearing was whether the new
school buildings would use environmentally sustainable design and construction
principles. Dr Carol Nicoll had the following to say on environmentally
sustainable designs and measures:
It is a condition of the national partnership agreement between
the states and territories and the Commonwealth and will be a condition of the
bilateral agreements that all projects that are funded under this will be done
to observe sustainable building and design principles. I have been speaking
with states and territories and block grant authorities over the past few days
as well, and I will continue to brief them in the next couple of days. I am
pointing out that that will be a condition of their funding, that they are to
take that into consideration. One of the areas of possibility for the minor
infrastructure fund, the school pride program, is insulation on that
premise—that is, it is going to be more sound for the sorts of issues that you
are concerned about if we try to insulate schools appropriately so that we can
reduce their impact on the environment.[27]
2.56
Similar questions were asked concerning the social housing initiative. Mr Leeper
replied:
Into the $400 million—we have not made any conditions there. In
the schedule to the national partnership agreements, we have indicated that
proposals under the components of the capital funding will have regard to a
number of factors, including their adherence to universal design principles
that facilitate access for people with disabilities and that the constructed
dwellings are environmentally sustainable. That is on page 17, schedule C,
paragraph (c)18 of the national partnership agreement that was signed
yesterday.[28]
2.57
There remained some concern as to what the definition of
'environmentally sustainable' was in this context. FaHCSIA replied that they
would endeavour to discuss the matter with states in subsequent discussions.[29]
The Defence Housing Australia was also asked about the energy efficiency
standards it adopted for new construction, and Mr Del Gigante answered:
We do a lot of it now. Solar heating we already do and also
water tanks, with greywater in some situations particularly when there is a
community of houses where they all participate in a greywater recycling system,
insulation—obviously roofs and walls and we have standards for wall insulation—energy
efficient lighting, landscaping—we just do not put down grass anymore—water
resistant plants et cetera. Also there are the materials we choose, the
chemicals and the sorts of carpets we use and recycling. We do look at childcare
requirements and schools when we develop land ourselves.[30]
Land Transport Initiatives
2.58
The land transport initiatives proposed include additional funding for
highway linkages, the installation of boom-gates at rail crossings and
additional funding for the Black Spot road safety program.
2.59
The Committee heard that in addition to the safety benefits inherent in
the spending, there was also an economic benefit from the construction, and
much of this would be delivered directly to rural and regional Australia. For
instance, the Department of Infrastructure, Transport, Regional Development and
Local Government identified that the bulk of the boom-gate funding would be
spent in rural Australia [31]
2.60
The Department was also asked to specify what percentage of the Black
Spot projects occurred in rural Australia. The Department responded that 50 per
cent of the project funding in each mainland state was reserved for
non-metropolitan projects, but the actual split changed year by year.[32]
2.61
As in discussion of the education and housing construction initiatives,
it was asked what would be done to ensure that there was no cost-shifting from
the States to the Commonwealth, so that all projects undertaken under the new
funding was in addition to the State's existing programs. The Department
specified during the hearing that mechanisms were in place to prevent this
occurring.[33]
More information was provided in an answer to a question on notice:
In relation to the Boom Gates for Rail Crossing Program, the
Australian Government will provide a capped level of funding $150 million over
2008-09 and 2009-10. A condition of the funding will be that the states and the
Northern Territory will be that they have to continue their existing programs
and report to the Australian Government on costs and projects associated with
programs funded from their own revenues.[34]
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