House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Treasurer, the Hon J. B. Hockey MP)

Chapter 4 - Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Minerals Resource Rent Tax Repeal and Other Measures Bill 2014

Schedule 1 - Repeal of the Minerals Resource Rent Tax

4.1 Schedule 1 is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

4.2 The MRRT applied from 1 July 2012 to taxable resources (broadly iron ore and coal) after they were extracted from the ground but before they underwent any significant processing or value adding. Coal seam gas produced as a necessary incident of coal mining was also included as a taxable resource to avoid unnecessary compliance and administration costs, and changes were made to the Petroleum Resource Rent Tax Assessment Act 1987 to ensure that the Petroleum Resource Rent Tax (PRRT) did not also apply to those resources.

4.3 The MRRT imposed a significant regulatory and compliance burden on the iron ore and coal mining industries, which was exacerbated by its complex design. Prior to the introduction of the MRRT, iron ore and coal miners were already subject to the relevant State royalty arrangements as well as to Commonwealth income tax.

4.4 The MRRT did not replace State royalties as originally envisaged by the Australia's Future Tax System Review, but instead imposed an additional layer of taxation. The revenue expected to be raised by the MRRT has been progressively revised down since its announcement, in part because the States increased their royalties (which are credited against MRRT).

4.5 Repealing the MRRT restores confidence and promotes activity in the mining industry, allowing it to thrive, create jobs and contribute to the prosperity of all Australians.

Human rights implications

4.6 Schedule 1 does not engage any applicable rights or freedoms.

Conclusion

4.7 Schedule 1 is compatible with human rights as it does not raise any human rights issues.

Schedule 2 - Repeal of loss carry-back

4.8 Schedule 2 is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

4.9 Loss carry-back was one of the measures funded by the revenue expected from the minerals resource rent tax. Loss carry-back is being repealed as part of the repeal of the Minerals Resource Rent Tax (MRRT).

4.10 Loss carry-back is a concession that departs from Australia's standard income tax arrangements (as identified for the Tax Expenditures Statement 2012 ^[6] ), which only allow taxpayers to carry their tax losses forward as deductions for later income years. Loss carry-back, which is only available to corporate tax entities, instead allows tax losses to be carried back to one of the two most recent income years to produce a refundable tax offset for the current year.

4.11 Carrying a loss back is a choice a corporate tax entity can make, not a requirement. The amount it can carry back is limited by its tax liability in the year it carries the loss back to and by the current balance in its franking account. Further, an entity can only carry back enough tax losses to produce an offset of $300,000 (at current corporate tax rates).

4.12 Repealing the loss carry-back measure restores corporate tax entities to the standard income tax treatment of tax losses; it does not mean they cannot use their losses at all. The repeal does affect when they can use those losses but, over time, they will be able to use all their tax losses in the same way they have always been able to, and in the only way currently available for all other taxpayers.

Human rights implications

4.13 Schedule 2 does not engage any applicable rights or freedoms.

Conclusion

4.14 Schedule 2 is compatible with human rights as it does not raise any human rights issues.

Schedules 3 and 4 - Changes to the capital allowances for small business entities

4.15 Schedules 3 and 4 are compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

4.16 The previous increases to the threshold for the small business capital allowance rules from $1,000 to $6,500 were funded by the revenue expected from the MRRT and the clean energy package. This threshold is reduced to its original level as part of the repeal of those packages.

4.17 The special rules for certain motor vehicles form part of the small business capital allowance rules and were a measure funded by the revenue expected from the MRRT. These special rules are being repealed as part of the repeal of the MRRT.

4.18 Small business entities can choose to apply the small business capital allowance rules for an income year. If they choose to apply the rules, they must do so in respect of all of the depreciating assets that they hold; they cannot apply the rules for some assets but not others. If a small business entity chooses not to apply the small business capital allowance rules for an income year, the ordinary rules for depreciating assets continue to apply.

4.19 Where the cost of a depreciating asset is less than the threshold, a small business entity can deduct the full cost of the asset (or 'write-off' the asset) in the income year in which it is first used or installed ready for use. Depreciating assets that cost more than that are allocated to the small business entity's general small business pool. Assets allocated to this pool give rise to a deduction for 15 per cent of their value in the first income year, and 30 per cent (as part of the pool) in subsequent income years.

4.20 The threshold also applies to additional costs incurred in respect of depreciating assets that were written-off by a small business entity in a previous income year. Where a cost of this kind is less than the threshold, a small business entity can deduct the full amount of the additional cost in the income year in which it is incurred. For an additional cost of a larger amount, the depreciating asset to which it relates is treated as having a value equal to the amount of the cost and is allocated to the small business entity's general small business pool. Assets of this kind are then treated in the same way as other assets that are allocated to the pool.

4.21 The threshold also applies to the value of a small business entity's general small business pool. Where the value of the pool at the end of the small business entity's income year is less than the threshold, the entity can claim a deduction for that income year for the value of the pool (the value of the pool is determined prior to applying any applicable rates of depreciation).

4.22 The special rules for certain motor vehicles provide a more generous deduction for depreciating assets that are motor vehicles in the income year in which the vehicle is first used or installed ready for use than is available for other depreciating assets. The special rules only apply to motor vehicles that cost more than $6,500 because the full value of any depreciating asset that costs less than that amount can be deducted in the income year that it is first used or installed ready for use.

4.23 The special rules for certain motor vehicles allow a small business entity to deduct the first $5,000 of the cost of a motor vehicle, plus 15 per cent of any remaining cost, in the income year that it is first used or installed ready for use. The motor vehicle is then added to the small business entity's general small business pool and depreciated as part of the pool at a rate of 30 per cent in subsequent income years.

4.24 The changes return small business entities to the position they were in prior to the enactment of the MRRT and clean energy packages; they reduce, but do not remove, the concessional tax treatment for depreciating assets available to small business entities.

4.25 The reductions to the thresholds change the time frames over which deductions may be claimed for certain depreciating assets and related costs. Assets and costs that can no longer be written-off in the income year that they are first used, installed ready for use, or incurred, can be allocated to a small business entity's general small business pool and depreciated at the applicable rates.

4.26 Similarly, motor vehicles to which the special rules for certain motor vehicles can no longer be applied can be allocated to a small business entity's general small business pool and treated in the same way as all other depreciating assets.

4.27 To the extent the small business capital allowance rules are applied, it is expected that they will result in a more favourable tax outcome for small business entities than would be the case under the general rules for depreciating assets. Where a small business entity has a more favourable tax outcome for an income year under the general rules, the small business entity remains free to choose to apply the general rules.

Human rights implications

4.28 Schedules 3 and 4 do not engage any applicable rights or freedoms.

Conclusion

4.29 Schedules 3 and 4 are compatible with human rights as they do not raise any human rights issues.

Schedule 5 - Repeal of the geothermal energy exploration deduction

4.30 Schedule 5 is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

4.31 Schedule 5 amends the Income Tax Assessment Act 1997 (ITAA 1997) to repeal the immediate deductibility of geothermal exploration or prospecting expenditure. Prior to the amendments in this Schedule, Division 40 of the ITAA 1997 provided that geothermal energy exploration rights were a depreciating asset. The immediate deductibility of geothermal energy expenditure related to the cost of depreciating assets first used for exploration or prospecting for geothermal energy resources.

4.32 These immediate deductions were limited to geothermal exploration or prospecting expenditures and not that expenditure related to geothermal development or extraction.

4.33 The geothermal deduction was funded with the expected revenue from the MRRT package, which is being repealed. As such, the deduction is also being repealed.

4.34 This measure does not affect a taxpayer's ability to claim a deduction for expenditure that relates to geothermal exploration assets which are tangible depreciating assets which are used for taxable purposes. That is, such assets will still be able to be written off over their effective lives, provided that they are used for a taxable purpose.

4.35 The amendments in this Schedule also extend the existing CGT roll-over in Division 124-L (prospecting and mining entitlements) to geothermal energy prospecting and extraction, ensuring that no tax liability arises from the exchange of a geothermal exploration right for an extraction right.

Human rights implications

4.36 This Schedule does not engage any of the applicable rights or freedoms.

Conclusion

4.37 This Schedule is compatible with human rights as it does not raise any human rights issues.

Schedule 6 - Rephasing of the SG charge percentage increase

4.38 Schedule 6 is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

4.39 Under the Superannuation Guarantee (SG) scheme, all employers are required to make a prescribed minimum level of superannuation contributions to a superannuation fund or a retirement savings account on behalf of their eligible employees.

4.40 The minimum level of employer superannuation contributions is calculated with reference to the SG 'charge percentage' (which is 9.5 per cent for the year starting on 1 July 2014) and each eligible employee's ordinary time earnings, salary or wages. The SG charge percentage is currently legislated to gradually increase to 12 per cent for years starting on or after 1 July 2019.

4.41 The passage of legislation to repeal the MRRT and make amendments to related spending measures (including the SG charge percentage) was delayed prior to the 2014-15 Budget, creating uncertainty for business. To provide certainty, the Government announced in the 2014-15 Budget changes to the schedule for increasing the SG charge percentage to 12 per cent.

4.42 In order to provide businesses and the community with appropriate notice about change to the SG charge percentage should the passage of the repeal legislation be further delayed, the amendments allow the Treasurer (as the responsible Minister) to vary the SG charge percentage for a particular year starting on 1 July, subject to a number of strict conditions. These conditions reflect the Government's policy as announced in the 2014-15 Budget in relation to the increase to the SG charge percentage.

4.43 The conditions are as follows: the determination must be made prospectively, the variation must not be less than the percentage that applied for the previous year, it must not be the same number for more than four years (apart from when it reaches 12 percent), and the Minister must specify a number that is a multiple of 0.5.

4.44 Given the SG is funded largely from business profits and wages, rephasing the SG could boost economic activity. Businesses, especially small businesses, will get some respite from higher operating costs and current challenging economic conditions, while workers could also receive more take home pay to ease cost of living pressures in the near term.

4.45 This measure does not affect an individual's eligibility for the social security safety net of the Age Pension (funded from Government revenue), which continues to be a fundamental part of Australia's retirement income system to ensure people unable to support themselves can have an adequate standard of living. In addition to providing a range of direct financial assistance, the Government also provides a number of concessions, such as access for older Australians to subsidised health care.

Human rights implications

4.46 This Schedule does not engage any of the applicable rights or freedoms.

4.47 However, the Parliamentary Joint Committee on Human Rights (Committee) sought clarification in its 1st report of the 44th Parliament ^[7] on the previous version of this Bill (the Mineral Resource Rent Tax Repeal and Other Measure Bill 2013) as to whether the measure was consistent with the right to an adequate standard of living and the right to social security.

4.48 The Parliamentary Secretary to the Treasurer, on behalf of the Treasurer, responded to the Committee's request by letter, which was published in the 8th report of the 44th Parliament. ^[8]

4.49 The Committee noted that in their view, the response did not provide a detailed and evidence based explanation for the measures.

4.50 In respect of the content of the right to social security contained in article 9 of International Covenant on Economic, Social and Cultural Rights (ICESCR) , the UN Committee on Economic Social and Cultural Rights (UN Committee) General Comment 19 states the right to social security includes contributory or insurance based schemes such as social insurance, non-contributory schemes such as universal schemes or targeted social assistance schemes, and other forms of social security such as privately run schemes and self help or other measures, for example community based or mutual schemes. The UN Committee states '[w]hichever system is chosen, it must conform to the essential elements of the right to social security and to that extent should be viewed as contributing to the right to social security and be protected by States parties in accordance with this general comment'.

4.51 The UN Committee notes in General Comment 19, Part II, Normative Content of the Right to Social Security, that the essential elements of the right to social security are the availability and accessibility of a system or systems in place to provide adequately for nine principal branches of social security: health care, sickness, old age, unemployment, employment injury, family and child support, maternity, disability, survivors and orphans. In respect of availability, the UN Committee states that the system should be established under domestic law and 'sustainable, including those concerning provision of pensions, in order to ensure that the right can be realised for present and future generations' (emphasis added).

In respect of old age, the UN Committee notes:

States parties should take appropriate measures to establish social security schemes that provide benefits to older persons, starting at a specific age, to be prescribed by national law. The Committee stresses that States parties should establish a retirement age that is appropriate to national circumstances which take account of, inter alia, the nature of the occupation, in particular work in hazardous occupations and the working ability of older persons. States parties should, within the limits of available resources, provide non-contributory old-age benefits, social services and other assistance for all older persons who, when reaching the retirement age prescribed in national legislation, have not completed a qualifying period of contributions or are not otherwise entitled to an old-age insurance-based pension or other social security benefit or assistance, and have no other source of income (footnotes omitted, emphasis added).

4.52 In respect of the right to an adequate standard of living contained in article 11(1) of the ICESCR, specifically:

'the right of everyone to an adequate standard of living for himself and his family, including adequate food, clothing and housing, and to continuous improvement of living conditions. The States Parties will take appropriate steps to ensure the realisation of this right, recognising to this effect the essential importance of international co-operation based on free consent',

the UN Committee has also issued guidance on the scope of the right, specifically relating to housing, food and water (see UN Committee General Comments Nos 4, 12 and 15).

4.53 These General Comments discuss the scope of this right as relating to adequate shelter (meaning adequate privacy, adequate space, adequate security, adequate lighting and ventilation, adequate basic infrastructure and adequate location with regard to work and basic facilities), the physical and economic access to adequate food and the sufficient, safe, acceptable, physically accessible and affordable water for personal and domestic uses.

4.54 The SG is a mandatory contributory private scheme for the provision of retirement income. The Age Pension, as 'non-contributory old-age benefits', are a fundamental part of Australia's retirement income system.

4.55 The SG measure amends the timetable for implementing an increase to the SG charge percentage from 9.5 per cent to 12 per cent; however the Government has committed to increasing the SG charge percentage. The original timetable for the SG rephase was linked to the failed Minerals Resource Rent Tax with the Government borrowing money to pay for this commitment. As noted in the Parliamentary Secretary to the Treasurer's response previously provided to the Committee, rephasing the SG needs to be seen in this context and will assist in repairing the damage to the nation's finances.

4.56 Further, as noted above, the SG measure does not affect an individual's eligibility for the Age Pension which is a fundamental part of Australia's retirement income system. Whilst the cumulative effect of the SG measure may mean that some individuals have fewer savings in retirement, retirement savings (over and above the social security net of the Age Pension) are accumulated over a working lifetime of approximately 40 years, and depend on a range of factors such as investment decisions and returns.

4.57 Given this, the Government is comfortable that the SG measure is compatible with human rights.

Conclusion

4.58 This Schedule is compatible with human rights as it does not raise any human rights issues.

Schedule 7 - Repeal of the low income superannuation contribution

4.59 Schedule 7 is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

4.60 Schedule 7 amends the Superannuation (Government Co-contribution for Low Income Earners) Act 2003 to repeal the low income superannuation contribution (LISC) for contributions made for the financial year before the financial year in which Schedule 7 commences (linked to a day fixed by Proclamation), the financial year in which the Schedule commences and later financial years. The LISC is a payment for an individual who has concessional contributions (such as SG payments, and salary scarified amounts) and an annual adjusted taxable income of $37,000 or less. The maximum amount payable is $500. The contribution is designed to effectively return the 15 per cent tax paid on concessional contributions by an individual's superannuation fund.

4.61 Similar to the SG measure noted above, the LISC was funded with the expected revenue from the MRRT. In order to ensure that the concessions in the superannuation system are sustainable for present and future generations, the LISC is being repealed.

4.62 This measure does not affect an individual's eligibility for the social security safety net of the Age Pension, which continues to be a fundamental part of Australia's retirement income system to ensure people unable to support themselves can have an adequate standard of living. In addition to providing a range of direct financial assistance, the Government also provides a number of concessions, such as access for older Australians to subsidised health care.

4.63 The Government will continue to provide the superannuation co-contribution, which is a payment designed as an incentive to low and middle-income earners to make additional voluntary contributions over and above any compulsory contributions made on their behalf.

Human rights implications

4.64 This Schedule does not engage any of the applicable rights or freedoms.

4.65 However, the Parliament Joint Committee on Human Rights raised the same concerns in its 1st report of the 44th Parliament on the previous version of this Bill (the Mineral Resource Rent Tax Repeal and Other Measure Bill 2013) as noted above in relation to the right to an adequate standard of living and the right to social security, as it raised in the context of the SG measure in Schedule 6.

4.66 For the same reasons as set out in relation to Schedule 6 above, the Government is comfortable that the measures set out in Schedule 7 of the MRRT Repeal Bill are compatible with human rights. In addition, The Government will continue to provide the superannuation co-contribution, which is a payment designed as an incentive to low and middle-income earners to make additional voluntary contributions over and above any compulsory contributions made on their behalf.

Conclusion

4.67 This Schedule is compatible with human rights as it does not raise any human rights issues.

Schedule 8 - Repeal of the income support bonus

4.68 Schedule 8 is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

4.69 Schedule 8 repeals the income support bonus (ISB) payment introduced into the social security law by the Social Security and Other Legislation Amendment (Income Support Bonus) Act 2013.

4.70 The ISB was intended to provide payments to eligible recipients to help them plan expenditure and provide a buffer against unexpected costs. The eligible recipients are those receiving ABSTUDY Living Allowance, Austudy, Newstart Allowance, Parenting Payment, Sickness Allowance, Special Benefit, Youth Allowance, Transitional Farm Family Payment, and Exceptional Circumstances Relief Payment.

4.71 ISB is also paid to eligible recipients under the Veterans' Children Education Scheme prepared under Part VII of the Veteran's Entitlement Act 1986 and under the Military Rehabilitation and Compensation Act Education and Training Scheme determined under the Military Rehabilitation and Compensation Act 2004.

4.72 People on any of the above payments receiving more than the basic amount of Pension Supplement are not eligible for the ISB.

4.73 Eligible recipients receive an indexed, twice yearly non-means tested bonus of $107.80 for single people or $89.90 for most people who are an eligible member of a couple. Eligible members of a couple separated by illness, or couples where a partner is in respite care or in gaol, receive the single rate of $107.80. The ISB is exempt from income tax.

4.74 ISB payments were made to eligible recipients in March and September of each year.

4.75 This measure affects persons who would have been eligible to receive the ISB as at the relevant test day. This does not mean that all persons who have previously qualified for the ISB or compensation payment would be eligible for the bonus as a significant number of people move on and off payments or are only paid for a short period of time.

4.76 Schedule 8 repeals provisions relating to the ISB in the Social Security Act 1991 and Social Security (Administration) Act 1999. Consequential amendments are also made to the Farm Household Support Act 1992 and the ITAA 1997.

Human rights implications

4.77 Schedule 8 interacts with the right to social security as recognised in Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR), and the right to an adequate standard of living in Article 11 of the ICESCR, in that the affected social security recipients no longer receive the ISB. However, persons affected by these amendments retain rights to social security benefits as recognised by Article 9 and maintain the right to an adequate standard of living as recognised in Article 11.

4.78 The rights to social security and an adequate standard of living are not absolute and may be subject to permissible limitations. Article 4 of the ICESCR provides that the rights in the Covenant may be subject to limitations that are determined by law which are compatible with the nature of these rights and are solely for the purpose of promoting the general welfare in a democratic society.

4.79 According to the Committee on Economic, Social and Cultural Rights, the right to social security includes the right not to be subject to arbitrary and unreasonable restrictions of existing social security coverage. ^[9] Any removal of entitlements must be justified in line with Article 4 in the context of the full use of the maximum available resources of the State party. ^[10]

4.80 The revenue expected from the MRRT was intended to fund a number of measures. With the repeal of the MRRT, these other measures are also repealed.

4.81 The repeal of the ISB is a non-arbitrary measure that is reasonable, necessary and proportionate for the following reasons:

•

the removal of the ISB does not result in payments being reduced to below the minimum level necessary for recipients to meet their basic needs in relation to essential health care, basic shelter and housing, water and sanitation, foodstuffs, and the most basic forms of education - the ISB was intended to provide additional support above the minimum necessary level;

•

Australia meets its obligations under Articles 9 and 11 of the ICESCR through the provision of a range of other payments or assistance to recipients of income support in addition to the basic payments such as Newstart Allowance and Parenting Payment. The additional payments and assistance includes Family Tax Benefit, Rent Assistance, Education Entry Payment and other allowances and supplements, and various concession cards which result in reductions to various expenses such as for public transport fares, electricity bills, council rates and motor vehicle registration charges;

•

obligations under Articles 9 and 11 are also met by the provision of a range of programs and other services by Commonwealth, and State and Territory governments including employment services and services in relation to health and education;

•

the Government considers that these other payments or assistance allow people to realise their right to an adequate standard of living and provide an appropriate balance between support for welfare recipients and providing appropriate incentives for people to re-engage in work and other activities to provide greater financial security for themselves and their families;

•

the effect of removing the ISB will be a reduction in an eligible recipient's entitlements of approximately only $4.00 per week. Bi-annual increases in the basic rate of the qualifying income support payments as a result of indexation are likely to exceed that amount;

•

in addition to indexation, from 20 March 2014 recipients of Newstart Allowance, Widow Allowance, Partner Allowance, Parenting Payment Partnered and Sickness Allowance attract a higher Income Free Area that enables them to earn more ordinary income in a fortnight before their payment is affected. The income free area will be increased for recipients of these payments from its present level of $62 per fortnight to $100 per fortnight; and

•

the measure removes the entitlement to the ISB from all income support recipients as a group and does not differentiate between recipients.

4.82 Accordingly, the measure to repeal the ISB is reasonable, necessary and proportionate to achieving a legitimate aim and is therefore a justifiable and permissible limitation on the relevant rights.

4.83 The Government will continue to review the adequacy of all welfare payments. Senate Inquiries into the adequacy of the welfare payment system and the impact of legislative amendments moving certain Parenting Payment recipients onto Newstart Allowance were undertaken in 2012. ^[11] The Government recently announced that it will undertake a further review of the welfare system.

Conclusion

4.84 This Schedule is compatible with human rights. To the extent that it interacts with human rights, those interactions are reasonable, necessary and proportionate to achieving a legitimate aim.

Schedule 9 - Repeal of the School kids bonus

4.85 Schedule 9 is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

4.86 Schedule 9 repeals the schoolkids bonus (SKB) payment.

4.87 The SKB is an indexed family assistance payment that is available to eligible families receiving Family Tax Benefit (FTB) Part A for a child in primary or secondary school. It is exempt from income tax.

4.88 Young people in school receiving Youth Allowance or certain other income support or veterans' payments may also qualify for the SKB.

4.89 The annual value of the SKB is $422 for each primary school child and $842 for each high school child, paid in equal instalments in January and July.

4.90 SKB payments were made to eligible recipients in January and July of each year.

4.91 This measure affects those families and individuals who would have been eligible to receive the SKB as at the relevant test day.

4.92 Schedule 9 repeals provisions relating to the SKB in the A New Tax System (Family Assistance) Act 1999 and the A New Tax System (Family Assistance) (Administration) Act 1999. Consequential amendments are also made to the ITAA 1997 and the Social Security (Administration) Act 1999.

Human rights implications

4.93 This Schedule interacts with the right to social security as recognised in Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) and Article 26 of the Convention on the Rights of the Child (CRC). This Schedule also interacts with the right to an adequate standard of living in Article 11 of the ICESCR, and Article 27 of the CRC.

4.94 Article 9 of the ICESCR requires a social security system to be established and states that a country must, within its maximum available resources, ensure access to a social security scheme that provides a minimum essential level of benefits to all individuals and families that will enable them to acquire at least essential health care, basic shelter and housing, water and sanitation, foodstuffs, and the most basic forms of education.

4.95 Article 11 of ICESCR recognises the right to an adequate standard of living. Article 27 of CRC recognises the right for every child to a standard of living adequate for the child's physical, mental, spiritual, moral and social development.

4.96 The rights to social security and an adequate standard of living are not absolute and may be subject to permissible limitations. Article 4 of the ICESCR provides that the rights in the Covenant may be subject to limitations that are determined by law which are compatible with the nature of these rights and are solely for the purpose of promoting the general welfare in a democratic society.

4.97 Any removals in entitlement must be justified in line with Article 4 in the context of the full use of the maximum available resource of the State party.

4.98 The repeal of the SKB is a non-arbitrary measure that is reasonable, necessary and proportionate.

4.99 Fortnightly rates of family assistance and income and veterans' support payments have the primary purpose of meeting the costs associated with raising a child. The SKB is a supplementary payment designed to provide additional assistance for education expenses.

4.100 This proposal does not affect an individual's or child's right or access to family tax benefit or income support and veterans' payments. This support will continue to provide families with children at school with assistance to ensure children have access to an acceptable standard of living. In addition, teenagers at school receiving income support or veterans' payments will continue to be eligible for their fortnightly rate of income support or veterans' payments.

4.101 Obligations under Articles 9 and 11 are also met through the provision of a range of programs and other services by the Commonwealth, States and Territories, including health and education.

4.102 The Government considers that these other payments or assistance allow people and children to realise their right to an adequate standard of living, and provide an appropriate level of support for families with children, or children in receipt of an income support or veterans' payment.

4.103 This measure removes the entitlement to the SKB from all eligibility families or individuals and does not differentiate between recipients.

Conclusion

4.104 This Schedule is compatible with human rights. To the extent that the changes interact with human rights, those limitations are reasonable, necessary and proportionate.