House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon. Josh Frydenberg MP)

Chapter 7 Amendments to Schedule 1AB

Outline of chapter

7.1 Schedule 7 to this Bill amends Schedule 1AB to the Financial Framework (Supplementary Powers) Regulations 1997 to establish legislative authority for government spending on new measures to:

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assist employers to retain apprentices and trainees.

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provide financial assistance to participants in the Australian aviation sector to assist with the impact on the sector of the Coronavirus.

Context of amendments

7.2 The Financial Framework (Supplementary Powers) Act 1997 confers on the Commonwealth, in certain circumstances, powers to:

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make arrangements under which money can be spent;

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to make grants of financial assistance; and

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to form, or otherwise be involved in, companies.

7.3 The arrangements, grants, programs and companies (or classes of arrangements or grants in relation to which the powers are conferred) are specified in the Financial Framework (Supplementary Powers) Regulations 1997. The Financial Framework (Supplementary Powers) Act 1997 applies to Ministers and the accountable authorities of non-corporate Commonwealth entities, as defined under section 12 of the PGPA Act.

7.4 Section 32B of the Financial Framework (Supplementary Powers) Act 1997 authorises the Commonwealth to make, vary and administer arrangements and grants specified in the Financial Framework (Supplementary Powers) Regulations 1997.

7.5 Section 32B also authorises the Commonwealth to make, vary and administer arrangements for the purposes of programs specified in the Financial Framework (Supplementary Powers) Regulations 1997. Schedule 1AA and Schedule 1AB to the Financial Framework (Supplementary Powers) Regulations 1997 specify the arrangements, grants and programs.

Summary of new law

7.6 Schedule 7 to this Bill amends Schedule 1AB to the Financial Framework (Supplementary Powers) Regulations 1997 to establish legislative authority for government spending on a new measure designed to assist employers to retain apprentices and trainees. The new measure will be administered by the Department of Education, Skills and Employment.

7.7 It also amends Schedule 1AB to establish legislative authority for government spending on a new measure to provide financial assistance to participants in the Australian aviation sector to assist with the impact on the sector of the Coronavirus. This measure will be administered by the Department of Infrastructure, Transport, Regional Development and Communications.

Comparison of key features of new law and current law

Detailed explanation of new law

7.8 Schedule 7 to this Bill adds two new table items to Part 4 of Schedule 1AB to establish legislative authority for government spending on certain measures that will be administered by the Department of Education, Skills and Employment and the Department of Infrastructure, Transport, Regional Development and Communications, respectively.

Retaining existing apprentices and trainees

7.9 The first new table item establishes legislative authority for government spending on a measure that provides financial assistance to businesses impacted by the Coronavirus to support them to retain their existing apprentices and trainees. It also aims to encourage employers and Group Training Organisations to re-employ apprentices and trainees displaced as a result of the impact of the Coronavirus on their employer. [Schedule 7, item 1, Part 4 of Schedule 1AB, table item 408]

7.10 This new table item supplements existing table item 360 in Part 4 of Schedule 1AB, which establishes legislative authority for government spending on the current Australian Apprenticeships Incentives Program to encourage the continued training and development of a highly skilled Australian workforce through Australian Apprenticeships.

7.11 The Coronavirus has the potential to have a profound impact on Australian business viability in the short to medium term, both through interruption to trade in goods and services and in supply chains. The disruption includes reduced business cash flow and undermined business viability, which could have consequences for the continuous engagement of apprentices in impacted businesses. It is likely that a number of apprentices and trainees across the economy will face an uncertain period of underemployment, or face being released from their apprenticeship, due to Coronavirus-related disruption of business activity.

7.12 Apprentices or trainees who are released from their apprenticeship may face challenges recommencing with another employer if businesses in their community are affected, leading to a loss of skills and difficulty completing their qualifications.

7.13 There are significant advantages in supporting employers to retain or re-employ out of trade apprentices, including supporting employment and ensuring training is not disrupted or left incomplete. This will realise the benefits of training already undertaken by apprentices and trainees and the significant investment made by the business employing them.

7.14 Funding under the assistance for apprentices and trainees package will be provided:

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for wage subsidies as part of the Australian Apprenticeships Incentives Program to:

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support small businesses (including those using a Group Training Organisation) to retain their existing apprentices and trainees, and

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support businesses of any size and Group Training Organisations to re-engage apprentices and trainees displaced from small businesses;

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to Australian Apprentice Support Network providers, under their existing contractual arrangements with the Department of Education, Skills and Employment, to support implementation of the initiative; and

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to the National Apprentice Employment Network to co-ordinate reemployment of displaced apprentices throughout their network of host employers across Australia.

7.15 To be eligible for a wage subsidy to retain an apprentice/trainee, a business will need to have employed the apprentice/trainee at the designated date of 1 March 2020 and provide evidence of wages paid.

7.16 To be eligible for a re-employment subsidy, a displaced apprentice/trainee must have been employed by a small business at the designated date of 1 March 2020, and have been released from their apprenticeship/traineeship by their employer.

7.17 Details about how to claim wage and re-employment subsidies and eligibility criteria will be set out in the Australian Apprenticeships Incentives Program Guidelines, which will be amended to give effect to the measure.

Constitutional power

7.18 Noting that it is not a comprehensive statement of relevant constitutional considerations, the objective of the item references the following powers of the Constitution:

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the external affairs power (section 51(xxix)); and

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the express incidental power and the executive power (sections 51(xxxix) and 61), including the nationhood aspect.

External affairs power

7.19 Section 51(xxix) of the Constitution empowers the Parliament to make laws with respect to 'external affairs'. The external affairs power supports legislation implementing Australia's international obligations under treaties to which it is a party.

7.20 Australia has obligations relating to employment under the ILO Convention (No. 142) concerning Vocational Guidance and Vocational Training in the Development of Human Resources, the ILO Convention (No. 122) concerning Employment Policy and the International Covenant on Economic, Social and Cultural Rights.

7.21 Article 1(1) of the ILO Convention 142 obliges Members to 'adopt and develop comprehensive and co-ordinated policies and programs of vocational guidance and vocational training, closely linked with employment'. Article 1(2) requires that the policies and programs adopted for the purposes of Article 1(1) to take due account of matters including 'employment needs, opportunities and problems, both regional and national' (Article 1(2)(a)).

7.22 Article 2 of the ILO Convention 142 obliges each Member to 'establish and develop open, flexible and complementary systems of general, technical and vocational education, educational and vocational guidance and vocational training, whether these activities take place within the system of formal education or outside it'.

7.23 Article 3 of the ILO Convention 142 obliges each Member to 'gradually extend its systems of vocational guidance, including continuing employment information, with a view to ensuring that comprehensive information and the broadest possible guidance are available to all... adults' (Article 3(1)). Such information and guidance is required to cover matters including 'vocational training and related educational opportunities' (Article 3(2)).

7.24 Article 4 of the ILO Convention 142 obliges each Member to 'gradually extend, adapt and harmonise its vocational training systems to meet the needs for vocational training throughout the life of both young persons and adults in all sectors of the economy and branches of economic activity and at all levels of skill and responsibility'.

7.25 Article 1(1) of the ILO Convention 122 requires Members to 'declare and pursue...an active policy designed to promote full, productive and freely chosen employment.' Article 1(2) specifies that this policy shall aim to ensure that (among other things) 'there is work for all who are available for and seeking work'. Article 2 of the ILO Convention 122 further requires Members 'decide on and keep under review ... the measures to be adopted for attaining the objectives specified in Article 1', and to 'take such steps as may be needed ... for the application of these measures'.

7.26 Article 2(1) of the International Covenant on Economic, Social and Cultural Rights obliges each State Party to take steps 'to the maximum of its available resources, with a view to achieving progressively the full realization of the rights recognized in the present Covenant by all appropriate means, including particularly the adoption of legislative measures'. In particular:

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Article 6(1) of the International Covenant on Economic, Social and Cultural Rights provides that States Parties recognise the 'right to work'; and

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Article 6(2) provides that States Parties shall take steps 'to achieve full realization of this right' including 'technical and vocational guidance and training programs, policies and techniques to achieve... full and productive employment.'

7.27 The wage subsidies and funding are designed to promote full, productive and freely chosen employment, in the form of Australian Apprenticeships, by encouraging employers who are impacted by the Coronavirus to retain their existing Australian Apprentices and trainees and/or re-employ displaced apprentices until they successfully complete their Australian Apprenticeship.

Executive power and express incidental power, including the nationhood aspect

7.28 The express incidental power in section 51(xxxix) of the Constitution empowers the Parliament to make laws with respect to matters incidental to the execution of any power vested in the Parliament, the executive or the courts by the Constitution. Section 61 of the Constitution supports activities that are peculiarly adapted to the government of a nation and cannot be carried out for the benefit of the nation otherwise than by the Commonwealth.

7.29 The proposed measures seek to further Australia's national interests by supporting businesses to maintain Australia's pipeline of skilled workers through Australian Apprenticeships, which broadens the employment opportunities for eligible individuals and help address employment needs and industry skills shortages.

Temporary financial relief for the aviation sector

7.30 A new table item is also inserted to establish legislative authority for government spending on a measure to provide financial assistance to aviation sector participants impacted by the Coronavirus. This is a temporary financial relief package for Australian airlines and other aviation sector participants due to the Coronavirus pandemic. Australia's airlines are at the forefront of an unprecedented period of falling international and domestic revenue beyond their control. [Schedule 7, item 1, Part 4 of Schedule 1AB, table item 409]

7.31 The airlines provide critical passenger and freight services which help underpin Australia's tourism and trade industries, and also provide essential connectivity to regional, remote and island territory communities. Therefore, the Government intends to provide temporary relief to Australia's airlines to help ensure there is a sustainable Australian airline industry able to respond to increased demand after the Coronavirus pandemic.

7.32 Initially this measure will provide financial assistance for airlines and airports who are bearing the brunt of the impact of the dramatic reductions in international and domestic air travel due to the Coronavirus. The assistance will include:

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reimbursing airlines to give effect to a waiver of aviation fuel excise;

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providing a rebate to airline operators for domestic aviation screening costs; and

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providing additional funding for infrastructure implementation costs and operational costs associated with enhanced security requirements at regional airports.

Waiver of aviation fuel excise

7.33 Airlines currently pay excise of 3.556 cent per litre on all aviation fuel consumed for domestic aviation operations.

7.34 Under this measure, the Government will provide a rebate to airlines for aviation fuel excise, paid on acceptance of a valid fuel invoice from the airlines.

Rebate to airline operators for domestic security screening

7.35 Security screening services for air travel are generally provided by airports to airlines. While the Australian Government sets screening standards, charges for these services are determined by commercial negotiations between airlines and airports.

7.36 Under this measure, airlines will receive a rebate from the Government for domestic aviation security costs, paid on acceptance of a valid invoice from the airlines. The invoice would need to contain sufficient information on security costs, which would need to be provided by the airports.

Funding for costs associated with enhanced security requirements at regional airports

7.37 Enhanced security screening requirements at regional airports are being introduced, which require a range of infrastructure modifications to accommodate expanded or larger equipment and processing areas. Under this measure, the Government will provide additional funding to airport operators to complete regional airport security infrastructure works if required for enhanced security screening requirements. The Government will also temporarily fund, under this measure, ongoing operational costs (largely staffing) associated with enhanced regional aviation security screening.

Constitutional power

7.38 Noting that it is not a comprehensive statement of relevant constitutional considerations, the objective of the item references the following powers in the Constitution:

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the interstate and overseas trade and commerce power (section 51(i));

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the express incidental power and the executive power (sections 51(xxxix) and 61), including the nationhood aspect;

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the external affairs power (section 51(xxix));

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the territories power (section 122); and

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the defence power (section 51(vi)).

Trade and commerce power

7.39 Section 51(i) of the Constitution empowers the Parliament to make laws with respect to 'trade and commerce with other countries, and among the states'.

7.40 The measure will involve assistance to participants in the aviation industry who are engaged in trade and commerce with other countries and among the states.

Executive power and express incidental power, including the nationhood aspect

7.41 The express incidental power in section 51(xxxix) of the Constitution empowers the Parliament to make laws with respect to matters incidental to the execution of any power vested in the Parliament, the executive or the courts by the Constitution. Section 61 of the Constitution supports activities that are peculiarly adapted to the government of a nation and cannot be carried out for the benefit of the nation otherwise than by the Commonwealth.

7.42 The measure will involve expenditure to address the Coronavirus pandemic, specifically its effects on the aviation sector.

External affairs power

7.43 Section 51(xxix) of the Constitution empowers the Parliament to make laws with respect to 'external affairs'.

7.44 The external affairs power supports legislation with respect to matters or things outside the geographical limits of Australia.

7.45 The measure will involve expenditure to aviation sector participants who undertake operations outside Australia, and to assist with the effect of the Coronavirus pandemic on these participants in connection with these operations.

7.46 The external affairs power also supports legislation implementing Australia's international obligations under treaties to which it is a party. Australia is a party to the Convention on International Civil Aviation (the Chicago Convention). Annex 17 to that Convention deals with security and the safeguarding of international civil aviation against acts of unlawful interference, and Chapter 4 of the Annex sets out the preventive security measures that each contracting State is to establish to achieve this goal. Annex 17 has been adopted by the Council of the International Civil Aviation Organization acting pursuant to Articles 37 and 54(I) of the Chicago Convention. Article 37 provides that each contracting State undertakes to collaborate in securing the highest practicable degree of uniformity in regulations, standards, procedures, and organisation in relation to aircraft, personnel, airways and auxiliary services in all matters in which such uniformity will facilitate and improve air navigation.

7.47 The measure will involve funding for screening at airports, which gives effect to Article 37 of the Chicago Convention, read with the standards set out in Annex 17 to that Convention, particularly Chapter 4 of that Annex.

Territories power

7.48 Section 122 of the Constitution empowers the Parliament to 'make laws for the government of any territory'.

7.49 The measure will involve expenditure to aviation sector participants who undertake operations into, out of, and within the territories, and to assist with the effect of the Coronavirus pandemic on these participants in connection with these operations.

Defence power

7.50 Section 51(vi) of the Constitution empowers the Parliament to make laws with respect to 'the naval and military defence' of the Commonwealth and States, and 'the control of the forces to execute and maintain the laws of the Commonwealth'. The defence power supports laws taking preventative measures in relation to terrorism, where those measures are reasonably appropriate and adapted to the prevention of a terrorist act.

7.51 The measure will involve funding for screening at airports, which is a preventive measure in relation to terrorism.

Application and transitional provisions

7.52 The amendments in Schedule 7 to this Bill will commence on the day after this Bill receives Royal Assent.