Professionals and the self education cap

Damian O'Connor, Partner, Brisbane

 

22/05/2013

The Treasurer announced  on 13 April 2013 that self education expenses tax deductions will be capped at $2,000 per annum from 1 July 2014. Please click here to read our publication on this topic.

Employer funded education expenses
Employee education expenses incurred by an employer will not be subject to the proposed cap. However, there is an anti- avoidance measure that stipulates that there must not be any salary sacrifice arrangement in connection with the education costs.
What are self education expenses?

Self education expenses can include costs of professional association seminars as well as courses at educational institutions, and are not limited to expenses incurred by an employees (see Taxation Ruling TR 98/9).
The costs of even one subject at an educational institution or attendance at just one industry conference will likely exceed the proposed cap, and there are a whole range of circumstances where employers may not be willing or able to fund the costs of employees maintaining and increasing the skills and knowledge that they use in earning their income.
The proposed measure is a very blunt tool which will operate differently depending on how the education expenses are structured – a limit of $2,000 if an employee meets the expenses directly, and perhaps no limit if an employer is involved.
What about the self-employed professional?
What happens if you are a self-employed professional faced with significant professional education obligations (such as medical practitioners, accountants and lawyers)?

On the face of it, self-employed professionals will be subject to the same $2,000 cap as employees without the ability to have these expenses (which are likely to amount to much more than $2,000 per annum for many professionals) dealt with by an employer.
While we would not expect this to be the intended outcome, Government expects to receive  significant extra tax revenue from the proposed self-education expense cap and professionals and others with these expenses  should take a very close look at the detail of the Government proposal, when it becomes available.

Where the BIG spenders are heading

http://www.yourinvestmentpropertymag.com.au/article/where-the-big-spenders-are-heading-175619.aspx

Your Investment Property and the team at TheNextHotspot.com.au reveal the hottest areas where retailers and airlines are expanding aggressively and where you should be looking too

WHERE AIRLINES ARE OPENING NEW ROUTES
Sydney-Dubbo: Qantas will add eight more flights to a total of 58 services per week.
Sydney-Gladstone: Qantas will start eight return flights a week.
Perth facilities: Qantas is expanding its Perth facilities.
Singapore- Perth: Jetstar has announced an additional six flights a week between Singapore and Perth.
Sydney-Tamworth: Qantas will add eight flights a week between Sydney and Tamworth, including a $400,000 expansion to its terminal facilities.
Melbourne – Hobart: Qantas will add an extra seven flights per week.
Melbourne – Launceston: Qantas plans to add an extra 11 flights per week to service tourism.
Sydney-Gold Coast: Qantas will reintroduce its full service flights between Sydney and Gold Coast in support for the joint Qantas and GC Tourism initiative.
Melbourne- Perth: Qantas announced it has expanded the number of its return flights to 68 from 44 airbuses. 
WOOLIES AND COLES STORES OPENING
Woolies are about to open or have recently opened shops in the following suburbs, which means these areas have already passed the population and future ongoing demand test and are worthy of a closer look.
Minto, NSW: Woolies announced it will open a new store in the redeveloped Minto Marketplace set to finish by December 2013. Located 48km southwest of the Sydney CBD, Minto is one of the larger suburbs of the Campbelltown local government area with a population of 10,307.
North St Marys, NSW: A working class suburb of the Penrith LGA, North St Marys is seeing a flurry of developments that are set to transform the suburb and boost its appeal to both homebuyers and renters. The construction of the Masters Home Improvement Centre has already started. This highly anticipated multi-million dollar development, will house a Woolies store.
Maribyrnong, Vic: A Woolies supermarket opened at the Highpoint City Shopping Centre in October 2012, which indicates the retailer is confident with the suburb’s fundamentals. Located 8km from the Melbourne CBD, Maribyrnong City is one of the fastest growing areas in the state with population rising by an average of 1.91% per annum over the past 10 years.
Lyndhurst, Vic: Woolies opened a store in Marriott Waters Shopping Centre in February 2013. Located 38km from the Melbourne CBD and just 5km from the economic hub of Frankston, Lyndhurst is certainly a suburb to watch.
Mayfield East, NSW: Coles submitted development approval for a $13m shopping complex in October 2012, cementing the suburb’s desirability for both residents and businesses. Five kilometres from Newcastle CBD, Mayfield East boasts a number of shops, schools, park and a TAFE campus.
Busselton, WA: Located just a short distance from Margaret River, Busselton is one of Western Australia’s most popular tourist destinations. Woolies opened a new store there at the end of last year, signalling its confidence in the area’s economic viability.
Brookwater, Qld: Brookwater, an emerging suburb of Ipswich, Queensland, is currently experiencing a flood of developments, ranging from real estate to commercial. Woolies added to the growing list of businesses expanding in the area, by opening its $15m store in the new $30m Brookwater Village Shopping Centre in February this year.
BUNNINGS STORES OPENING
Mentone, VIC: Mentone houses the biggest Bunnings store in Victoria. The giant, $75m Bunnings store opened in June 2012, creating more than 100 new jobs for residents.
Warragul, vIC: The rural town of Warragul is located around 103km south east of Melbourne. The town’s economy is largely supported by agriculture and is one of the biggest milk suppliers for Melbourne. With Bunnings opening its door in the area, the area’s economic credentials are further enhanced.
Goulburn, NSW: Bunning’s choice of Goulburn to open one of its warehouses is no surprise.  The suburb has a large and growing population base and boasts a broad range of employment opportunities thanks to the local hospital, a maximum security jail and the NSW Police Academy.
Singleton, NSW: Singleton is attracting a large number of new residents lured by the job opportunities in the resources sector. The town is surrounded by pastures, vineyards and national parks making it desirable for families as well.
Armadale, WA: Armadale’s reinvigoration has attracted Bunnings, who recently opened its doors in the suburb. With excellent transport links and amenities, the suburb’s growing appeal to homebuyers is evidenced by its rising population.

New rental laws for WA landlords from July

New rental laws for WA landlords from July

• Property bubble

by michaelway

WA landlords will have to maintain minimum levels of door and window security and outdoor lighting for tenants following the introduction of new rental laws.
New legislation in WA covering tenancy agreements, bonds, databases and limit option fees will come into effect in July.
Refundable option fees for rental applications will be limited to either $50, for properties renting under $500 a week or $100 for properties renting below $1200 a week.
The options fees are charged to rental applicants and are often a week’s rent. They are refunded if the applicant is unsuccessful. Limiting the fees will allow renters to apply for multiple properties without incurring excessive fees.
All security bonds will be handled by a centralised body run by the Commerce Department instead of held in trusts by real estate agencies.
Property condition reports will now be compulsory at the end of each tenancy and landlords will be limited to four inspections per year.
Tenants will have access to tenancy databases which are used to check a tenant’s history with the ability to challenge inaccurate and outdated information.
And tenants will be able to seek emergency repairs where an owner has not taken action within 24 hours.
Commerce minister Michael Mischin says the laws will strengthen the rights of tenants and property owners.
“These changes were the result of extensive consultation with stakeholders and the community and will create a fairer rental market that balances the rights and interests of both tenants and property owners,” Mischin says.
The REIWA says told The Australian Financial Review they welcome the laws which strike the right balance between the interests of renters and landlords.
Alistair Walsh
Monday, 13 May 2013
First published at www.propertyobserver.com.au

Planet Gas out of NSW includes Gunnedah cancelled CSG MINE

Planet Gas Winds Up CSG Activities in NSW

Planet Gas Limited has announced its withdrawal from coal seam gas activities in New South Wales, Australia.
Under farm-in agreements with Leichhardt Resources, Planet Gas had the rights to earn 50% equity in three PELs at Bylong (PEL 468) and Shoalhaven (PEL 469) in the Sydney Basin and at Mooki (PEL 470) in the Gunnedah Basin.

By mutual agreement, Planet Gas and Leichhardt have agreed the exit from each farm-in agreement and Planet Gas will retain no residual interest or liability, Planet Gas said in a statement.

Planet Gas's Managing Director, Anthony McClure commented said the current environment in New South Wales does not fit with the company’s objectives being primarily focused on the Cooper Basin in South Australia.

Budget 2013: Seniors allowed to sell family home without risking age pension

http://www.dailytelegraph.com.au   

THIRTY thousand seniors will be able to sell up and move into more manageable residences while their profits are shielded from means testing in a special account.

Under a $112.4 million, three-year trial from July next year, they will be able to sell their home - which must have been owned for 25 years - buy a smaller home and sink 80 per cent of the remaining proceeds - up to $200,000 - into a special bank account.
The money, plus interest, will be exempt from the age pension means test for up to 10 years as long as no withdrawals are made, except to be gifted.


People moving into granny flats or retirement villages can also benefit, but not those moving to residential aged care.

Currently, the pension assets test doesn't take into account the value of a home.

But if the home is sold, cash assets can trigger a means test that dilutes pension payments.

Families Minister Jenny Macklin said many older Australians were staying in sprawling homes with difficult-to-manage stairs and gardens because they were scared moving would see their pension cut.

''We certainly heard from pensioners they want the opportunity to downsize,'' Ms Macklin said.

''Obviousy it's up to them, but we want to give people the opportunity to go into a smaller home if that's what they would like to do.
''This is a way of having a home that might be a bit more managable.''
It is hoped the trial will free up family homes in a tight housing market.


Meanwhile, the Government will spend $9.9 million extending its Broadband for Seniors program, which has already seen about 2000 free internet kiosks built in places like RSLs and community centres for seniors to surf the web and learn computer skills.

And $4.6 million will be used to set up an institue for ageing to nail down the pros and cons of an ageing population in fields like health and wellbeing, community participation and changing infrastructure needs.

The Simplified 2013 Federal Budget Report by Matt O'Connor

2013 Federal Budget Report

A great friend of the family Matt has done this summary for us on The 2013 Federal Budget.

Matt O'Connor <matt@oconnorassociates.com.au>

ABN: 26 149 828 919

Principal

M.A. O’Connor, FIPA, FAICD, AFA, MFAA

MBA, ADFS (FP), Grad.Cert (Prof Acc), B.Bus (Acc)

SYDNEY

PO Box 7466 BAULKHAM HILLS BC NSW 2153

Phone:     02 8814 5880

Fax:         02 8814 5802

Email:       office@oconnorassociates.com.au

Web:        www.oconnorassociates.com.au

15 May 2013

2013 Federal Budget Report

On the 14^th May 2012, the Treasurer Mr Wayne Swan handed down the 2013/14 Federal Budget and I have detailed various parts of it for your perusal.

Economic Outlook

The treasurer said with the strong Australian dollar, the total write down in revenue since the GFC was around $170bn. The Treasurer commented that this budget is about jobs and growth and this is why a $19bn deficit has been estimated bringing the budget back into surplus in 2015/16.

With the write down of $17bn in revenue in the 2012-13 year, Australia remains among eight countries in the world to preserve its AAA credit rating despite the revenue losses and economy pressures imposed from a high Australian dollar.

Superannuation reforms

The Government has confirmed its intention to implement the following superannuation reforms:

·         Taxing earnings in pension phase that exceed $100,000 pa at 15%. 

·         Special arrangements will apply when assessing capital gains on assets purchased by a fund before 1 July 2014:

o   Presently, where a capital gain is made in a superannuation fund, whilst in pension phase, is tax free

o   For assets purchased before 5 April 2013, a full exemption will continue to apply to capital gains that accrue before 1 July 2024

o   For assets purchased from 5 April 2013 to 30 June 2014, individuals will have the choice of including in the $100,000 limit the capital gain, or only that part that accrues after 1 July 2014; and

o   For assets purchased from 1 July 2014, the capital gain will be included in the $100,000 limit.

·         Recognising deferred annuities for earnings tax concession purposes

·         Increasing the concessional contributions cap to $35,000 from:

o   1 July 2013 for those aged 60 and over

o   1 July 2014 for those aged 50 and over

·         Increasing the ability to refund excess concessional contributions and allowing excess concessional contributions to be taxed at an individual’s marginal tax rate

·         Deeming account based pensions under the social security income test

·         Increasing the balance threshold below which certain lost super must be transferred to the ATO

·         Establishing a Council of Superannuation Custodians

·         Additional 15% tax on concessional contributions for high income earners as follows:

o   Individuals who exceed the combined $300,000 annual threshold will generally have to pay an additional 15% tax on their concessional contributions

o   If an individual’s income before concessional contributions is less than $300,000 but the inclusion of concessional contributions pushes them over, then only that part of the excess over $300,000 threshold will be subject to the additional tax.

Taxation

·         The personal income tax cuts which involved increasing the tax free threshold to $19,400 scheduled to commence on 1 July 2015, is deferred.

·         The Medicare levy will increase by 0.5% from 1.5 to 2.0 per cent from 1 July 2014 to provide funding for Disability Care Australia.

·         The Medicare levy low-income threshold for families will increase to $33,693 for the 2012/13 income year, with effect from 1 July 2012. The additional amount of threshold for each dependent child or student will increase to $3,094.

·         The net medical expenses tax offset will phase out from 1 July 2013

·         Work related self-education expense deductions are to be restricted through an annual $2,000 cap on expenses from 1 July 2014

·         Current marginal tax rates remain as follows:

Taxable income	Tax on this income
0 - $18,200	Nil
$18,201 - $37,000	19c for each $1 over $18,200
$37,001 - $80,000	$3,572 plus 32.5c for each $1 over $37,000
$80,001 - $180,000	$17,547 plus 37c for each $1 over $80,000
$180,001 and over	$54,547 plus 45c for each $1 over $180,000

Social Security

·         The Government proposes to increase the free income area for eligible income support recipients from the current rate of $62 per fortnight to $100 per fortnight from 20 March 2014.  The payments affected by this proposal are:

o   Newstart allowance

o   Sickness allowance

o   Parenting Payment (Partnered)

o   Widow Allowance

o   Partner Allowance Benefit

o   Partner Allowance Pension

·         The Pension Bonus Scheme closed for most new entrants as of 20 September 2009.  However, eligible individuals who were over pension age as of 20 September 2009 are still able to apply for Centrelink’s discretion for late registration.  From 1 March 2014, the Government will cease to accept late registrations.

·         The Government proposes to exempt proceeds from downsizing the family home:

o   Currently, the family home is not assessed if the dwelling and adjacent land is less than 2 hectares

o   The Government proposes a pilot plan which will offer a means test exemption for Age Pensioners who are downsizing the home.  To qualify:

§  The family home must have been owned for at least 25 years; and

§  At least 80% of the proceeds from the sale (up to $200,000) must be deposited into a special account by an authorised deposit taking institution.

o   These funds (plus interest) will be exempt from pension means testing for up to 10 years provided there are no withdrawals during the life of the account

o   The pilot plan will commence on 1 July 2014 and be closed for new customers from 1 July 2017

Families

·         The Baby Bonus will be replaced from 1 March 2014 as follows:

o   The Government will increase the Family Tax Benefit (FTB) Part A by $2,000 for the first child and $1,000 for subsequent children

·         The Government will freeze the indexation of eligibility thresholds and amounts for certain family based payments at their current levels until 1 July 2017. This will mean:

o   $150,000 for the Paid Parental Leave Scheme, FTB Part B, certain dependency tax offsets, Dad & Partner Pay, and

o   The FTB Part A upper income limit will remain at $94,316, plus an additional $3,796 for each child after the first.

·         From 1 January 2014, FTB Part A will only be paid until the end of the calendar year a child completes school

·         The Child Care Rebate which provides a 50% rebate on out of pocket eligible child care expenses, up to a maximum of $7,500 per child per year, will pause for indexation.

Please feel free to contact our office if you require any further information in relation to the above.

Yours sincerely

Matt O'Connor

NSW Community unites to fight Ku-ring-gai rezoning plan

Community unites to fight Ku-ring-gai rezoning plan

• Brian Karlovsky,
• Hornsby Advocate
• May 10, 2013 10:49AM

A PUBLIC campaign has been launched to save a preschool, a counselling service and the town hall after Ku-ring-gai council voted to rezone 23 sites to fund a new council chambers building.

The $22 million fire sale of council assets, to fund the council’s acquisition of a new administration building at 828 Pacific Hwy, Gordon, includes Gordon Community Preschool, Lifeline crisis support service and Culworth Ave carpark, Killara. The sites have been described as “under-utilised council assets”.
Thirteen residents pleaded to have the controversial parcels of land removed from the hit list of sites to be reclassified from community to operational land at last week’s meeting.
But it was to no avail as Ku-ring-gai Mayor Elaine Malicki used her casting vote to break the deadlocked vote and defeat the motion.
Councillor David Citer said the preschool was fundamental to building the resilience of the next generation in Ku-ring-gai.
“Are the dollar signs more important than creating the next generation of Ku-ring-gai residents,” Cr Malicki said. “I think not.”
Cr Malicki told the council that the idea they were selling off the farm was “simply unfair”.
“It’s to rationalise council assets so that we have the best use of community assets,” Cr Malicki said.
Gordon community preschool has launched a campaign to save the preschool and held a meeting on Tuesday night for supporters.
Supporters have collected more than 700 signatures for a petition calling on the councillors to oppose the sale of their preschool, which has 148 students on its books.
The site in Park Ave, Gordon is earmarked for high- density residential.
Preschool director Felicity Barclay said she was disappointed with the council decision.
“Obviously, as you would imagine, the parents are very concerned and upset,” Ms Barclay said.
“The support we have received is extraordinary.
“It’s absurd to think this would happen to pay for council comfort.”

SELLING THE FARM
■ Ku-ring-gai Council has voted to reclassify 23 parcels of community land in a bid to fund the $22 million purchase of a new council administration centre
■ The sites earmarked for sale include Lifeline crisis support service, Gordon Community Preschool, Ku-ring-gai Town Hall and the Pymble playgroup centre
HOW THEY VOTED
■ FOR THE REZONING: Councillors Malicki, Pettett, Fornari-Orsmond, Anderson and Ossip
- Cr Malicki used casting vote
■ AGAINST: Councillors McDonald, Szatow, Armstrong, Citer and Berlioz

     

NSW Blacktown residents vow to fight rezoning

            Blacktown residents vow to fight rezoning

• Ben McClellan
• Blacktown Advocate
• February 18, 2013 3:17PM

Angry residents from Greenwood Grove and Keld Place, Blacktown are furious at the new Blacktown Council Local Environment Plan as their homes have been rezoned as 'Recreational space'. Picture: Jeff Herbert Source: NewsLocal

CHARLES NG was preparing to celebrate Australia Day, hoisting the flag from his Blacktown home, when he received a letter debunking the myth a man's home is his castle.

The Blacktown Council letter told the Ida Pl resident of 28 years his home would be rezoned as "recreational" and the council could compulsory acquire it under the draft Land Environment Plan to expand a nearby park.
Mr Ng said he was "devastated" by the news and has joined with other residents in his neighbourhood, who will also have their homes rezoned, to get the draft LEP changed.

"We are horrified at council's complete lack of social responsibility and appear only interested in planning policy," he said.

The council has earmarked more than 350 lots in Blacktown and Seven Hills for possible acquisition in the LEP, including more than 20 in Mr Ng's neighbourhood, to expand the dilapidated Joseph Frank Park, next to the Sportsman Tavern on Kildare Rd.

Greenwood Grove resident Leigh Watkins said the rezoning would make their homes unsalable and was furious council said it had no clear plans for the areas it could acquire.

"If they've go no plans for it what's the point? Why put everyone through this, devaluing homes," she said.

"It's controlling our lives. If I want to leave Blacktown I can't because nobody will buy my house.

"I was horrified that they can compulsorily acquire a land and only pay market value for the land. It's daylight robbery, I can't believe they legally can do this."

Blacktown plans to be home to more than 500,000 people by 2036 and the Blacktown City Masterplan, which covers the Blacktown neighbour, calls for 82ha of open space and more than 20,000 homes.

A council spokeswoman said the rezoning was not an automatic requirement for the land to be acquired.

"The acquisition of land for a public purpose will take place over a long period of time as the area develops," she said.

"The increase in the density of development within the Blacktown City Centre places a greater need to provide more useable, accessible, functional and a sufficient amount of public open space for the projected increase in population."

She also said the majority of the identified properties were also located within a medium risk flood precinct which would constrain their "development potential".

Ms Watkins said Joseph Frank Park was an overgrown fire hazard and their homes were being sacrificed to build more homes elsewhere in the city.

More than 100 Seven Hills residents met on the weekend to discuss the rezoning of their homes near International Peace Park.

DRAFT LEP

• More than 350 Blacktown and Seven Hills lots earmarked for acquisition by council

• 21 homes near Joseph Frank Park, Blacktown, to be rezoned recreational

• Blacktown residents vow to fight rezoning

• Submissions can be made by emailing lepsubmissions@blacktown.nsw.gov.au or phone 9839 6000 for mailing details

• View the LEP at Blacktown Council's administration centre, 62 Flushcombe Rd, Blacktown

Will Abbott ‘axe the tax’ and what are the impediments to this being achieved

Will Abbott ‘axe the tax’ and what are the impediments to this being achieved?

Scott Laycock, Partner, Sydney

Scott Higgins, Senior Associate, Sydney and Stephanie Venuti, Solicitor, Sydney

22/03/2013

http://www.gadens.com.au

Its worth following Garden since they have many open sessions on property and can be found

on their website 

and previous articles found here http://www.gadens.com.au/publications

The Leader of the Opposition, Tony Abbott has pledged that if the Coalition is elected in this year’s federal election, he will repeal the carbon tax and proceed to a double dissolution if his repeal legislation doesn’t pass the Senate. 

Save for exceptional circumstances (such as the Government losing a vote in the Lower House or a new Prime Minister being installed and choosing a different date) 14 September 2013 is the date when Australians go to the polls in a national election.  Amongst other things, the future of the Australian carbon price hangs in the balance.

Carbon price basics

In Australia, liable companies are nearing the end of their first compliance year (1 July 2012 – 30 June 2013) of the carbon price, introduced by the Clean Energy Act 2011.  For the first three years, there is no cap on emissions and the carbon price is fixed at $23 (adjusted marginally each year to account for inflation) (Fixed Price Period). 

From 1 July 2015, the carbon price moves from operating like a fixed ‘tax’ to an emissions trading scheme (Flexible Price Period).  Under the Flexible Price Period a cap on emissions will be set and a limited number of carbon units (operating like a permit to pollute) will be auctioned and sold on secondary markets.  The price of these units will not be fixed.  In meeting their annual carbon liability, liable entities will also be able to supplement their use of carbon permits purchased in Australia with international carbon permits.

Impediments to repeal
Whilst few would doubt Mr Abbott’s determination to repeal the legislation, if the Coalition is elected this year, there are certain legal, practical and political impediments to implementing a repeal of the carbon price:

Double Dissolution - Timing

• Given that Labor and the Greens will almost certainly oppose any repeal legislation, Mr Abbott needs to secure a majority in the Senate.  On 13 March 2013, the ABC’s chief election analyst, Antony Green described the scenario in his Election Blog as follows: [i] 
 

“The Coalition is highly unlikely to gain enough Senate seats to achieve control of the Senate in its own right.  However, if the election can change the composition of the Senate cross-bench, then the Abbott government could achieve its goal of repealing the carbon price legislation, and also find itself a negotiation path on other legislation that avoids having to deal with the Greens and Labor….The election of a WA National and a Katter candidate from Queensland would almost certainly give an Abbott government the numbers to repeal the carbon price legislation. However, it would not necessarily deliver government control over all legislation.”

• If this occurs, then there will be no need for a double dissolution and Australia could find itself without a carbon price shortly after the new Senators take their seats (1 July 2014). However, if these Senate victories do not eventuate for the Coalition in September 2013, a double dissolution would almost certainly be necessary before a Coalition government can pass its repeal legislation.

• A double dissolution may only be called if a bill to repeal the carbon price legislation is voted down in the Senate twice.  An interval of three months between tabling the same bill twice is required by section 57 of the Constitution and the Senate must be afforded a ‘proper opportunity for debate’ on each occasion.

• A curiosity of the electoral system means that the newly elected Senators from the 14 September 2013 election (a half-Senate election) will not take their seats until 1 July 2014.  A double dissolution in the interim could be subject to challenge because the Governor-General would effectively be terminating the terms for those newly elected Senators (and before they had even been sworn in) on the basis of a decision by the pre-existing Senators to block the repeal legislation. [ii]

• It is therefore likely that any attempt to call a double dissolution prior to the latter part of 2014 or early 2015 might be subject to challenge. 

Double Dissolution – the politics

• Any double dissolution means going back to the polls after the Coalition will have only just regained power following six years of Labour-led government.  The Coalition is unlikely to take this step unless it is confident of achieving a more favourable result than it achieves in the September 2013 federal election.

• Early indications from the operation of the carbon price over the past nine months suggest that it has had a limited impact on inflation and the Coalition’s dire predictions of it being a ‘wrecking ball’ to the economy have not been realised.  Compensation payments via tax breaks for low income families are also now in operation.
 

One would expect this to result in a softening of voter opposition to the carbon price, however the latest Australian Financial Review/Nielson poll shows that consistent majority of voters who believe they are no worse off still oppose the policy and support its repeal.[iii]
The change in the level of voter support or opposition to the carbon price will be monitored closely throughout 2013 and into 2014 as this will dictate the success or failure of any double dissolution.

• The level of support for repeal from business is less clear.   Earlier this month, the manufacturing lobby group, Ai Group called for a move to the emissions trading period rather than scrapping the carbon price in its entirety.  This approach might attract increasing support from the business community to the extent that a market-based system (with availability of cheap international permits, no floor price and free allocation of permits for some industries) is more attractive than the Coalition’s current ‘Direct Action’ policy.

• There is already evidence that this is occurring with the Australian Financial Review reporting[iv] that generators and key industry bodies have been voicing concern to the Coalition over how the Direct Action policy will work in practice, whether it will be cheaper than international abatement options under the current scheme and whether it will cause unfair advantage to some companies given compensation which has already been paid and which the Coalition has said will not be clawed back.

• EU and Australian bureaucrats are racing to implement an inter-governmental Registry link by mid-2013 (prior to the September election) to facilitate trading in EU Allowances by Australian liable entities in anticipation of the emissions trading scheme commencing in Australia by 1 July 2015 (see Linking Australian and European emissions trading schemes for more details click here).  If this expedited timetable can be met, and if Australian entities take up the trading opportunity with some enthusiasm, repeal could become much more unpopular amongst the Australian business community and also more unsavoury from an international relations perspective.

• A repeal of the Fixed Price Period whilst retaining emissions trading from 1 July 2018 (or another date) might be an available compromise for the Coalition.  Whilst it might be a semantic distinction, a Coalition government could also claim that by removing the Fixed Price Period and going to a Flexible Price Period they are still honouring their commitment to repealing the carbon ‘tax’ (as opposed to the emissions trading scheme).  Alternatively, introducing some mechanism for the use of cheap international carbon units by liable companies under the Direct Action policy might assist the Coalition to secure industry support for the repeal of the emissions trading scheme.

Potential challenges to repeal legislation

• Even if the Coalition is successful in ultimately obtaining Senate support for repeal legislation, section 56(xxxi) of the Constitution would make any repeal legislation which resulted in the acquisition of property on unjust terms, subject to challenge on the basis that it is outside the power of Parliament.

• Shadow Minister for Climate Action, Greg Hunt and some legal commentators[v] have suggested that repealing the carbon price legislation would be an ‘extinguishment of a proprietary right’ and not an ‘acquisition of property’ in the meaning of section 56 (xxxi).  However, detractors[vi] emphasise that carbon units generated under the scheme (along with prescribed international units proposed to be incorporated into the scheme after 1 July 2015) are expressly stated in the legislation to be ‘personal property’ and are subject to ownership, transfer and other equitable dealings like any other type of property or chattel.  Assuming carbon units are ‘property’ (which seems the better view) the more pertinent question is whether any repeal legislation will amount to an ‘acquisition’ of that property and, if so, is it on ‘just terms’.

• At the time of any likely repeal legislation, liable entities will have already purchased units from the Clean Energy Regulator at $24.15 each, purchased Australian Carbon Credit Units in respect of the Carbon Farming Initiative, received free allocation of permits (which it can sell to others for a price) and perhaps purchased Kyoto units like CERs and European units (known as EUAs) in anticipation of being able to use these from 1 July 2015.

• In respect of the Australian units, unless compensation is offered or some buy-back system is provided for, arguably this ‘property’ has been ‘acquired’ by the Government with an absence of ‘just terms’ because the liable entities have been deprived the opportunity to generate income from the sale of those units.

• Assuming a European and international carbon market still exists for the sale of Kyoto units and EUAs, then liable entities would be able to offload these credits in those markets (albeit perhaps at a price disadvantage).  A repeal of the domestic market for such credits would not constitute ‘acquisition’ of such property.

• Repeal legislation is therefore quite capable of being implemented without offending section 56(xxxi) of the Constitution, however, lawmakers will need to be careful in their drafting and some compensation may need to offered before one can be truly confident that it would withstand any challenge.

What this means for your business
Notwithstanding the potential for repeal, in light of the above factors, liable entities would be prudent to proceed on the basis that the fixed carbon price may well remain in place for most of the next two years.  There also remains a potential for the emissions trading scheme to commence operation from 1 July 2015 as per the current legislation and perhaps equally a likelihood of this date being brought forward pursuant to a Coalition Government compromise.

In addition to maintaining current compliance obligations under the Clean Energy Act 2011, Australian liable entities and interested stakeholders should consider the implications of the new EU linking proposal, the changes to the legislation in respect of availability of foreign carbon units and the removal of the floor price.

These issues are addressed in the following articles:

• European carbon markets in turmoil as EU Parliament dithers on rescue plan (to view article please click here)

• Linking Australian and European emissions trading schemes (to view article please click here).

[i] ‘Antony Green’s Election Blog: Could Western Australia Deliver Control of the Senate’ 13 March 2013 at http://blogs.abc.net.au/antonygreen/2013/03/could-western-australia-deliver-the-coalition-control-of-the-senate.html#more
[ii] At the time of writing, Prime Minister Gillard has successfully thwarted a leadership spill in which Kevin Rudd elected not to challenge.  Controversial media laws have also been abandoned.  The prospects of a new leader being installed and an earlier election date being chosen or required now seem unlikely.  However, if this were to occur and if an earlier election date is chosen by a new leader (or required under the Constitution due to a key independent such as Tony Winsor removing support for the Government) then this has profound implications for the matters discussed in this article.  These include opening the door for the Coalition to try to avoid the need for a half-Senate election by May 2014 by engineering a double dissolution trigger in the interim.  See for example: ‘Antony Green’s Election Blog: In which Party’s Interest is an Early Election’ at http://blogs.abc.net.au/antonygreen/2012/09/which-party-wants-an-early-election.html#more
[iii] ‘Climate same on carbon price’ Philip Coorey Australian Financial Review 18 March 2013
[iv] ‘Carbon tax repeal plan draws fire’ Marcus Priest, 19 March 2013 Australian Financial Review
[v] Andrew Macintosh (Associate Director of the ANU Centre for Climate Law and Policy), Abbott has pledged to repeal the carbon tax – but could it be done?  2 July 2012 The Conversation
[vi] George Williams, Professor of Law at University of NSW ‘Abbott courts trouble with carbon tax plans’ 26 October 2011 Sydney Morning Herald

Victoria increases First Home Owner GrantVictoria increases First Home Owner Grant

Victoria increases First Home Owner Grant

http://www.abc.net.au

The Victorian Government has announced an increase to the First Home Owner Grant and stamp duty cuts for people purchasing new homes.

From July 1 the grant will be increased from $7,000 to $10,000 for newly constructed homes, and stamp duty for all first purchases will be decreased by 40 per cent.
Treasurer Michael O'Brien says Victorian families will be thousands of dollars better off.
"The average price of a newly constructed first home is about $400,000," Mr O'Brien said.
"With these announcements, Victorian families will be over $16,500 better off with the combination of the increased grant and the stamp duty cuts."
But the Real Estate Institute of Victoria's says it is disappointed the Government is scrapping the grant for people who are buying established properties.
The institute's chief executive Enzo Raimondo says the changes effectively mean those purchasing existing homes will be subsidising a discount for those buying newly constructed homes.
"History has shown first home buyers generally buy established [homes]," Mr Raimondo said.
"They generally want to buy close to where they work, and in Melbourne that's inner and middle suburbs, so this is going to make it a bit more difficult for first-home buyers of established properties in Melbourne."
Mr Raimondo says the changes just bring Victoria into line with most other states.
"A number of other states have removed the first home owners' grant for established housing," he said.
"Every state in Australia, with the exception of the resource states, are facing some tough economic times.
"What the Treasurer's done is not unexpected."
But Mr O'Brien says the advantages will be wide-reaching, with the housing construction industry also set to benefit.
"We acknowledge the housing construction industry is a really important employer of people in this state. We want to see that grow," he said.
"We want to see more jobs and we also want to make sure we have more housing stock to meet the needs of a growing population."