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Australian Senate Standing Committee for the Scrutiny of Bills - Scrutiny Digests |
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Purpose
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Schedule 2 seeks to extend the application of the Credit Code to ‘Buy
Now, Pay Later’ contracts and establishes Low Cost
Credit Contracts as a
new category of regulated credit.
Schedule 3 seeks to amend the Medicare Levy Act 1986 to make changes
to how certain eligible lump sum payments in arrears are assessed for the
purposes of the Medicare levy.
Schedule 4 seeks to require certain large multinational enterprises to
publish selected tax information on a Country-by-Country basis
for specified
jurisdictions.
Schedule 5 seeks to add various deductible gift recipients to the Income
Tax Assessment Act 1997.
Schedule 6 seeks to amend the Federal Financial Relations
Act 2009 to support Commonwealth payments to the states in accordance
with the National Skills Agreement.
Schedule 7 seeks to extend the $20,000 instant asset write-off by 12 months
until 30 June 2025.
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Portfolio
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Treasury
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Introduced
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House of Representatives on 5 June 2024
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Bill status
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Before the Senate[184]
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2.144 This bill seeks to insert Part 3—2BA into the National Consumer Credit Protection Act 2009 to provide for additional voluntary rules for licensees that are credit providers relating to low cost credit contracts (LCCCs). Amongst other matters this includes, in proposed new sections 133BXB and 133BXC, additional obligations for licensees to inquire into the suitability of entering into a LCCC or increasing the credit limit of a LCCC with a consumer who will be the debtor under the contract. This involves an obligation on licensees to make reasonable inquiries about a consumer’s requirements and objectives and financial situation,[186] including whether the consumer is financially vulnerable and any additional matters prescribed by the regulations.[187] Licensees may elect for Part 3—2BA to apply to them in relation to some or all low cost credit contracts and are therefore electing to have additional requirements placed on them.
2.145 In Scrutiny Digest 7 of 2024, the committee sought the Treasurer’s advice as to what safeguards are in place to protect personal financial information, including whether the Privacy Act 1988 applies to all licensees entering into low-cost credit contracts. [188]
2.146 The Assistant Treasurer advised that the bill provides that buy now pay later (BNPL) contracts are included within the application of the National Consumer Credit Protection Act 2009 (the Credit Act). In relation to privacy, the Assistant Treasurer advised that this has the effect of bringing BNPL contracts, including those with small businesses, within the privacy protections relating to credit reporting. This means that Part IIIA of the Privacy Act will apply regardless of annual turnover of BNPL entities if they are a credit provider as defined by the Privacy Act.
2.147 The Assistant Treasurer further advised that any providers with an annual turnover of more than $3 million will also be subject to further Privacy Act requirements including the Australian Privacy Principles. In addition, the Australian Finance Industry Association’s BNPL Code of Practice imposes privacy obligations which apply to approximately 95% of the relevant market.
2.148 The committee thanks the Assistant Treasurer for this advice which provides welcome information on the level of privacy protections and safeguards applicable to BNPL contracts. The committee notes that it would have been useful if this information had been included in the explanatory materials.
2.149 Noting the Assistant Treasurer’s advice that a range of privacy safeguards apply to buy now pay later contracts including the Privacy Act 1988, the committee considers its concerns have been addressed and makes no further comment in relation to this matter.
2.150 The bill seeks to insert section 3DA into the Taxation Administration Act 1953 to provide for the kinds of information that must be published by certain country by country (CBC) reporting entities. Proposed subsection 3DA(7) is an interpretation provision, which provides that certain documents must be considered to determine the effect of other provisions in section 3DA and this can include, in subparagraph 3DA(7)(b)(iii), a document, or part of a document, prescribed by the regulations.
2.151 In Scrutiny Digest 7 of 2024, the committee sought the Treasurer’s advice as to whether documents incorporated by reference under proposed subparagraph 3DA(7)(b)(iii) of the Taxation Administration Act 1953 will be made freely available to all persons interested in the law. [191]
2.152 The Assistant Treasurer advised that the expectation is for any incorporated documents to be freely and publicly available, noting that the materials are existing public documents. Providing for the regulations to prescribe documents for interpretation, the Assistant Treasurer advised, will allow the government to update guidance in line with changes from the relevant bodies.
2.153 The committee thanks the Assistant Treasurer for confirming that any documents incorporated by reference under subparagraph 3DA(7)(b)(iii) will be freely and publicly available. Noting this advice, the committee considers its concerns have been addressed and makes no further comment in relation to this matter.
2.154 The bill seeks to repeal section 12 of the Federal Financial Relations Act 2009 (FFR Act) which provides for lump sum national skills and workforce development payments to the states as indexed each financial year. In its place, item 3 seeks to insert Part 2A into the FFR Act to provide for a flexible funding model with financial assistance to the states payable in accordance with the skills and workforce development agreement,[194] currently the National Skills Agreement that took effect on 1 January 2024 and as amended from time to time.[195]
2.155 Proposed subsection 12A(2) provides that the minister may determine an amount to be paid to a state for the purpose of making a grant of financial assistance for the financial year in accordance with the skills and workforce development agreement. Subsection 12A(3) provides that this determination is not subject to disallowance. Subsections 12A(4) and (5) further provide that the financial assistance payable to a state is on condition that it be spent in accordance with the skills and workforce development agreement and subject to any other terms and conditions set out in the agreement.
2.156 Further, item 7 of Schedule 6 to the bill seeks to amend the appropriation provision in section 22 of the FFR Act to insert Part 2A, with the effect that payments made under Part 2A (national skills and workforce development payments) are to be made out of the Consolidated Revenue Fund which is appropriated accordingly.
2.157 In Scrutiny Digest 7 of 2024, the committee sought the Treasurer’s advice as to:
• whether proposed subsection 12A(3) can be removed to allow for appropriate parliamentary oversight of ministerial determinations through the usual disallowance process;
• whether the bill could place a limitation on the amount of funds that may be appropriated or duration in which it will exist for;
• whether the standing appropriation is subject to a sunset clause and, if not, whether it would be appropriate for such a clause to be included in the bill; and
• what mechanisms are in place to report to the Parliament on any expenditure authorised by the standing appropriation. [196]
2.158 In relation to the exemption from disallowance, the Assistant Treasurer advised that determinations of an amount to be paid to a State for that financial year for financial assistance are not subject to disallowance as they facilitate an intergovernmental agreement between the Commonwealth and the States. Providing for the Parliament to disallow such a determination would, the Assistant Treasurer argued, undermine relations and create uncertainty for States who expend funds based on an understanding of the amount of reimbursement they will receive from the Commonwealth. Further, the Assistant Treasurer advised that the exemption from disallowance is consistent with similar payment arrangements such as the national health reform payments.
2.159 In relation to the standing appropriation the Assistant Treasurer advised that a cap or limitation on the funds appropriated under section 22 of the FFR Act for national skills and workforce development payments would be impractical as such payments are dependent on the terms set out in Commonwealth and State agreements as well as indexation updates at Budget and the Mid-Year Economic and Fiscal Outlook. It would therefore be difficult to set a cap in advance as the cap would need to predict an entitlement for a State, and, the Assistant Treasurer added, estimating a limitation could risk a lack of sufficient funding and risk the Commonwealth not meeting its funding agreements.
2.160 In relation to a sunsetting clause for section 22 of the FFR Act, the Assistant Treasurer advised that the lack of a sunsetting clause ‘reflects the ongoing financial contribution the Commonwealth makes to States under the Intergovernmental Agreement on Federal Financial Relations’. Further, it would be inappropriate to amend section 22 in relation to concerns regarding these specific payments as section 22 provides a mechanism for other, unrelated standing appropriations to be made.
2.161 Finally, in relation to oversight mechanisms, the Assistant Treasurer advised that oversight is provided through the status of the determinations as legislative or notifiable instruments which state the amounts to be paid each year. Further, the Budget Papers provide details of the funding arrangements to provide additional transparency to the Parliament.
2.162 The committee thanks the Assistant Treasurer for this response. However, the committee reiterates its concerns that the effect of these proposed amendments is to reduce parliamentary oversight and scrutiny by moving the amounts payable to the states from the FFR Act, and the terms and conditions which attach to them, to the skills and workforce development agreement.
2.163 In relation to the exemption from disallowance for instruments made under proposed subsection 12A(2) of the FFR Act, the committee considers that it is appropriate that the exercise of this power be subject to effective parliamentary scrutiny via the disallowance process. The committee therefore reiterates its advice that the fact that an instrument is made to facilitate the operation of an intergovernmental scheme is not reason, in itself, for exempting an instrument from the usual parliamentary disallowance or sunsetting process.
2.164 In this regard, the committee notes the comments of the Senate Standing Committee for the Scrutiny of Delegated Legislation in its final inquiry report into the exemption of delegated legislation from parliamentary oversight, in relation to the exemption from disallowance of instruments made for the purposes of an intergovernmental scheme:
The implication is there has been significant negotiation and scrutiny in the process of obtaining agreement from all government parties. While this may be the case in some instances, this is not sufficient for it to stand as a blanket exemption from disallowance.
As expressed by the Centre for Comparative Constitutional Studies, this rationale establishes a domain of executive activity exempt from parliamentary oversight. And it would seem the justifications provided are not sufficient to allow for a departure from the principle of executive accountability to the Parliament. If indeed there has been significant negotiation and scrutiny, and all parties to the agreement are satisfied, that it might then be disallowed would seem a minute risk of insufficient size to justify an exemption.
Nevertheless, if examined on its merits and found to provide a compelling case for exemption, and if appropriately circumscribed, an exemption may be appropriate in limited and rare circumstances. Exemption should not be automatic, and there should not be an exemption from sunsetting of such instruments.[198]
2.165 The committee considers that the Assistant Treasurer’s response does not put forward such a compelling case for exemption from disallowance, and there appears no real reason for the exemption from sunsetting.
2.166 Further, while noting the explanation provided by the Assistant Treasurer as to why a standing appropriation is necessary, the committee remains concerned that section 22 authorises significant Commonwealth expenditure with minimal parliamentary oversight and involvement.
2.167 The committee therefore draws this matter to the attention of senators and leaves to the Senate as a whole the appropriateness of item 3 of Schedule 1 to the bill which seeks to insert Part 2A into the Federal Financial Relations Act 2009 without ensuring an appropriate level of parliamentary oversight for grants of Commonwealth funding made to the States for national skills and workforce development payments.
[183] This entry can be cited as: Senate Standing Committee for the Scrutiny of Bills, Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024, Scrutiny Digest 9 of 2024; [2024] AUSStaCSBSD 161.
[185] Schedule 2, item 14, proposed Part 3—2BA; item 64, proposed section 331. The committee draws senators’ attention to these provisions pursuant to Senate standing order 24(1)(a)(i).
[186] Subsection 133BXC(2).
[187] Paragraphs 133BXC(3)(c) and (f).
[188] Senate Standing Committee for the Scrutiny of Bills, Scrutiny Digest 7 of 2024 (26 June 2024) pp. 52 – 58.
[189] The minister responded to the committee’s comments in a letter dated 16 July 2024. A copy of the letter is available on the committee’s webpage (see correspondence relating to Scrutiny Digest 9 of 2024).
[190] Schedule 4, item 1, proposed subparagraph 3DA(7)(b)(iii). The committee draws senators’ attention to this provision pursuant to Senate standing order 24(1)(a)(v).
[191] Senate Standing Committee for the Scrutiny of Bills, Scrutiny Digest 7 of 2024 (26 June 2024) pp. 52 – 58.
[192] The minister responded to the committee’s comments in a letter dated 16 July 2024. A copy of the letter is available on the committee’s webpage (see correspondence relating to Scrutiny Digest 9 of 2024 ).
[193] Schedule 6, item 3, proposed subsection 12A(2); item 7, proposed section 22. The committee draws senators’ attention to these provisions pursuant to Senate standing order 24(1)(a)(iv) and (v).
[194] Item 3, proposed subsections 12A(4) and (5).
[195] Item 2, proposed section 4.
[196] Senate Standing Committee for the Scrutiny of Bills, Scrutiny Digest 7 of 2024 (26 June 2024) pp. 52 – 58.
[197] The minister responded to the committee’s comments in a letter dated 16 July 2024. A copy of the letter is available on the committee’s webpage (see correspondence relating to Scrutiny Digest 9 of 2024 ).
[198] Senate Standing Committee for the Scrutiny of Delegated Legislation, Inquiry into the exemption of delegated legislation from parliamentary oversight: final report (16 March 2021) pp. 106–107.
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