Australian Government, 2007–08 Budget

Treasury

Australia Post — continuation of funding for competition regulation

Expense ($m)
2007-08 2008-09 2009-10 2010-11
Australian Competition and Consumer Commission - - - -

The Government will provide $2.4 million over four years to the Australian Competition and Consumer Commission to continue the regulation of postal services under the Australian Postal Corporation Act 1989 and the Trade Practices Act 1974.

This measure continues funding of the measure Increased regulatory oversight of Australia Post in the Mid-Year Economic and Fiscal Outlook 2002-03. It includes funding of $0.6 million per annum over four years from 2007-08. Provision for this funding has already been included in the forward estimates.

Australian Prudential Regulation Authority — strengthened capabilities and continuation of funding

Expense ($m)
2007-08 2008-09 2009-10 2010-11
Australian Prudential Regulation Authority - - - -
Related revenue ($m)
Australian Prudential Regulation Authority - - - -

The Government will provide $22.0 million over four years to continue to support the maintenance of high levels of specific industry expertise in the Australian Prudential Regulation Authority, and provide a focus on regulating emerging threats to financial stability.

Funding will continue to be fully recovered through levies on the financial sector.

This measure continues the initiative in the 2003-04 Budget Australian Prudential Regulation Authority – strengthened capabilities in prudential regulation. This measure involves $5.5 million per annum over four years from 2007-08. Provision for this funding has already been included in the forward estimates.

Australian Prudential Regulation Authority — sustaining capabilities in prudential regulation

Expense ($m)
2007-08 2008-09 2009-10 2010-11
Australian Prudential Regulation Authority 6.8 6.0 5.7 5.5
Related revenue ($m)
Australian Prudential Regulation Authority 6.8 6.0 5.7 5.5

The Government will provide $24.1 million over four years to address the increased complexity of the financial services sectors that the Australian Prudential Regulation Authority is required to regulate and monitor. The funding will enable the Australian Prudential Regulation Authority to continue to maintain required levels of specific industry expertise.

Funding will be fully recovered through levies on the financial sector.

Australian Securities and Investments Commission — information technology security and risk mitigation phase 2 and application development

Expense ($m)
2007-08 2008-09 2009-10 2010-11
Australian Securities and Investments Commission 19.6 23.6 15.1 2.2
Related capital ($m)
Australian Securities and Investments Commission 37.0 13.5 5.7 -

The Government will provide $116.7 million over four years (including capital funding of $56.2 million) for the redevelopment of the Australian Securities and Investments Commission’s IT systems. This includes funding for migrating the Commission’s systems to new platforms and technologies, improving the useability of its website, addressing enforcement needs, and implementing new document collection and management systems.

COAG — performance benchmarking for Australian business regulation

Expense ($m)
2007-08 2008-09 2009-10 2010-11
Productivity Commission 2.4 3.1 3.2 3.2
Related capital ($m)
Productivity Commission 0.5 - - -

The Government will provide $12.3 million over four years (including capital funding of $0.5 million) to allow the Productivity Commission to benchmark the regulatory burden faced by business across jurisdictions. The process will provide the basis for further reductions in the cost of regulation for businesses.

Funding in 2010-11 is contingent on the outcomes of a review of the benchmarking exercise to be completed in 2009-10.

This measure forms part of an agreement made by the Council of Australian Governments (COAG) on 13 April 2007. Further information can be found in the Communiqué, available from www.coag.gov.au.

Debt collection enhancement — reducing taxation debt and outstanding superannuation guarantee charge payments

Expense ($m)
2007-08 2008-09 2009-10 2010-11
Australian Taxation Office 44.5 46.4 46.1 42.8
Related revenue ($m)
Australian Taxation Office 5.0 45.0 45.0 45.0
Department of the Treasury 3.0 4.3 4.2 3.7
Total 8.0 49.3 49.2 48.7
Related capital ($m)
Australian Taxation Office 3.3 1.3 1.3 -

The Government will provide $125.7 million over four years (including $5.9 million in capital over three years) to help reduce the existing stock of taxation debt and outstanding superannuation guarantee charge payments owed by employers. The remaining $60.0 million of expenses reflects the expected transfer of superannuation guarantee charge payments to employees’ superannuation accounts. The enhanced debt recovery will ensure that the level of collectable taxation debt is manageable over the longer term.

The enhanced debt recovery is expected to result in additional revenue collection of $140.0 million over four years. Total tax related cash collections and superannuation guarantee cash receipts, including amounts previously recognised as revenue, are expected to increase by $1.4 billion over four years.

This process is also expected to result in additional GST collections for the States and Territories. The Department of the Treasury will recover $15.2 million over four years from the States and Territories for the cost of administering the additional GST collections.

See also the related item titled Debt collection enhancement ― reducing taxation debt and outstanding superannuation guarantee charge payments in Appendix C of Budget Paper No. 3.

Energy Grants (Cleaner Fuels) Scheme

Expense ($m)
2007-08 2008-09 2009-10 2010-11
Australian Taxation Office - - - -
Related revenue ($m)
Australian Taxation Office - - - -
Australian Customs Service - - - -
Total - - - -

The Government will refine and clarify the operation of the Energy Grants (Cleaner Fuels) Scheme Act 2004 and related provisions to reduce compliance burdens and better support the scheme’s policy intent. The measure will take effect from the date of Royal Assent of the enabling legislation.

The scheme provides grants to:

  • offset the excise duty and excise-equivalent customs duty payable on certain renewable fuels (currently biodiesel and renewable diesel); and
  • promote the production of low sulphur conventional fuels before their mandated standards under the Fuel Quality Standards Act 2000 are brought in.

Currently, entitlement to a grant occurs when the fuel effectively enters the market in its final form. This approach has led to an increased compliance burden associated with the tracking of renewable fuels through the excise system to the point of final entry to the market.

The measure will reduce compliance costs by shifting entitlement to receive the renewable fuels grant to the point of production or importation of fuels that meet the relevant fuel standards.

The arrangements for low sulphur conventional fuels will remain substantially unchanged.

Financial Reporting Council — continuation of funding

Expense ($m)
2007-08 2008-09 2009-10 2010-11
Department of the Treasury - - - -

The Government will provide $4.0 million over four years to continue to support the expanded role of the Financial Reporting Council under Part 9 of the Government’s Corporate Law Economic Reform Programme. The Council’s role includes oversight of audit standard setting and auditor independence issues.

This measure continues funding of Financial Reporting Council – funding to support expanded role in the 2003-04 Budget. This measure involves funding of $1.0 million per annum over four years from 2007-08. Provision for this funding has already been included in the forward estimates.

New Business Intensive Assistance Programme

Expense ($m)
2007-08 2008-09 2009-10 2010-11
Australian Taxation Office 10.0 10.0 10.0 10.0

The Government will provide $40.0 million over four years to enable the Australian Taxation Office (ATO) to increase support it provides to new businesses, particularly those that prepare their own Business Activity Statements, with effect from 1 July 2007.

This measure will enable the ATO to conduct more face-to-face visits and telephone visits to new businesses, assisting them to understand their GST and other record keeping obligations and to develop good record keeping procedures.

Pre-filling of tax returns for individuals with simple affairs

Expense ($m)
2007-08 2008-09 2009-10 2010-11
Australian Taxation Office 20.0 - - -

The Government will provide additional funding of $20 million in 2007-08 to enable the Australian Taxation Office (ATO) to pre-fill electronic tax returns for around nine million taxpayers, with effect from the 2007-08 income year.

The ATO will pre-fill electronic returns with information on:

  • salary, wages and allowances, where the employer has lodged the employee’s payment summary electronically with the ATO;
  • dividend and interest income and distributions from managed funds;
  • payments from Centrelink, the Department of Education, Science and Technology and the Department of Veterans’ Affairs;
  • Medicare out-of-pocket expenses and private health insurance information; and
  • Higher Education Contribution Scheme and Higher Education Loan Programme details.

Taxpayers with additional sources of income, such as rental income, capital gains or foreign-source income, will need to augment their returns with that information, as would individuals whose employer had not lodged payment summaries electronically with the ATO.

This measure will make completing income tax returns significantly easier for the 80 per cent of individual taxpayers who use e-tax or lodge their returns through a tax agent.

Simplified Superannuation — additional funding for implementation

Expense ($m)
2007-08 2008-09 2009-10 2010-11
Australian Taxation Office 40.5 38.0 - -

The Government will provide additional funding of $78.5 million over two years for information and communications technology (ICT) costs for delivering simplified superannuation reform.

The additional funding reflects revised estimates of the ICT costs associated with implementing the reforms.

Standard Business Reporting

Expense ($m)
2007-08 2008-09 2009-10 2010-11
Australian Customs Service - - - -
Department of Finance and Administration - - - -
Australian Taxation Office - - - -
Australian Bureau of Statistics - - - -
Department of the Treasury - - - -
Total - - - -
Related capital ($m)
Australian Bureau of Statistics - - - -

The Government will provide $7.3 million in 2006-07 to develop systems to reduce the reporting burden on business in a coordinated and consistent manner. Funding will be used to work with relevant agencies to develop new policy proposals for significant, sustained reductions in the reporting burden.

Funding of $1.7 million will be provided to the Department of the Treasury, $1.5 million to the Australian Bureau of Statistics (including $0.9 million for development of whole-of-government infrastructure), and $0.4 million to the Department of Finance and Administration (to be offset from within existing resourcing) to establish a single coordination and support authority for Standard Business Reporting.

Costs of $2.1 million will be met from the existing resourcing of the Australian Taxation Office, and costs of $1.5 million will be met from the existing resourcing of the Australian Customs Service.

Superannuation — additional Government co-contribution

Expense ($m)
2007-08 2008-09 2009-10 2010-11
Australian Taxation Office - - - -

The Government will provide $1,070 million in 2006-07 to pay a one-off additional superannuation co-contribution for those persons who made eligible contributions in the 2005-06 income year. This will double the co-contribution paid in respect of that year.

For example, if a person was eligible for a co-contribution of $1,500 in respect of the 2005-06 income year they will now receive an extra co-contribution of $1,500, making a total co-contribution of $3,000. If they were eligible for a $500 co-contribution they will receive a total co-contribution of $1,000 for the year.

In the majority of cases the additional co-contribution will be paid to superannuation funds before 30 June 2007, at a cost of $990 million in 2006-07 on an underlying cash basis. Remaining amounts will be paid in 2007-08, at an estimated cost of $80 million on an underlying cash basis.

Suspending GST compensation

Expense ($m)
2007-08 2008-09 2009-10 2010-11
Department of the Treasury -18.2 -19.1 -20.1 -21.1

The Australian Government compensates the States in respect of the cost of its decision to allow certain small businesses and non-profit organisations to pay their GST liability on an annual rather than monthly or quarterly basis. This ensures that the full financial impact of the decision is borne by the Australian Government, rather than the States. As part of the compensation arrangements, it was agreed that once final tax return data was available there would be an ex-post adjustment to account for any over or under-payment of compensation for a particular year.

Final tax return data for 2004-05 now indicates that the impact of the policy decision on GST revenue was lower than forecast. Consequently, there has been an overpayment of compensation to the States.

To prevent further overpayment, the Australian Government will suspend future compensation payments until final tax return data for 2005-06, 2006-07 and 2007-08 is available, and then acquit accounts with the States based on a net present value calculation of the required compensation.

This is expected to provide an estimated saving of $95.7 million over five years to 2010-11 including $17.2 million in 2006-07.

Further information is contained in Budget Paper No. 3.

Treasury — additional resourcing

Expense ($m)
2007-08 2008-09 2009-10 2010-11
Department of the Treasury 6.6 6.7 6.8 7.0

The Government will provide $27.2 million over four years to the Department of the Treasury to help sustain its role as a key central policy agency and to provide timely and comprehensive policy advice to the Treasurer and the Government.

Understanding Money — building Australia’s financial literacy

Expense ($m)
2007-08 2008-09 2009-10 2010-11
Department of the Treasury 6.0 - - -

The Government will provide $6.0 million in 2007-08 to the Department of the Treasury for two activities to be undertaken by the Financial Literacy Foundation, with $4.0 million to be provided to extend the Understanding Money media campaign, and $2.0 million to be provided to increase professional development opportunities for teachers to support implementation of the National Consumer and Financial Literacy Framework.