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2016
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
SEAFARERS SAFETY AND COMPENSATION LEVIES BILL 2016
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Employment, Senator the Hon. Michaelia Cash)
Outline
SEAFARERS SAFETY AND COMPENSATION LEVIES BILL 2016
OUTLINE
The Seafarers Safety and Compensation Levies Bill 2016 (the Bill) imposes two levies (an
insurance levy and a cost recovery levy) on seafarer berths. The levies will fund two cost
components of the Seacare scheme, which is a national work health and safety and workers'
compensation scheme for a very small proportion of employees in the maritime industry.
The seafarers insurance levy will support a safety net fund for seafarers where the employer
cannot meet its workers' compensation obligations because of financial circumstances. This
component of the levy is unchanged from the levy collected under the Seafarers Rehabilitation
and Compensation Levy Act 1992. The levy will continue to be calculated on the basis of
seafarer berths and will be set at $15 unless changed by regulations. Any increase will be based
on the recommendation of an actuarial assessment of the amounts payable from the safety net
fund. The cost of the administrative component of maintaining the fund will be based on a
recommendation made by the Safety, Rehabilitation and Compensation Commission (SRCC).
This will be added to the actuarial component which will also be funded from the seafarers
insurance levy.
The seafarers cost recovery levy is intended to recover the costs of the SRCC, Comcare and the
Australian Maritime Safety Authority (AMSA) in performing their respective regulatory
functions in relation to the Seacare scheme where these costs are not readily attributable to a
specific organisation or individual. The initial levy is set at $0. This levy will be introduced on a
staggered basis, with the levy amount set by regulations. The cost recovery levy will also be
calculated on the basis of seafarer berths and will be collected in the same way as the insurance
levy.
The Bill and the Seafarers Safety and Compensation Levies Collection Bill 2016 (the Levies
Collection Bill) replace the Seafarers Rehabilitation and Compensation Levy Act 1992 and the
Seafarers Rehabilitation and Compensation Levy Collection Act 1992, respectively.
The Bills form part of a package of legislative reforms to modernise aspects of the Seacare
scheme, aligning work health and safety with the model work health and safety laws, giving
effect to recommendations in a review of workers compensation and making the scheme
consistent with the government's cost recovery guidelines.
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Financial Impact Statement
FINANCIAL IMPACT STATEMENT
N/A
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Regulation Impact Statement
REGULATION IMPACT STATEMENT
This Bill forms part of a package of legislative reforms - see the regulatory impact statement for
the Seafarers and Other Legislation Amendment Bill 2016, which addresses all Bills in the
package.
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Statement of Compatibility with Human Rights
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Seafarers Safety and Compensation Levies Bill 2016
The Seafarers Safety and Compensation Levies Bill 2016 (the Bill) 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
The Bill imposes two levies (an insurance levy and a cost recovery levy) on seafarer berths. The
levies will fund two cost components of the Seacare scheme, which is a national work health and
safety and workers' compensation scheme for a very small proportion of the maritime industry.
The seafarers insurance levy will support a safety net fund for seafarers where the
employer cannot meet its workers' compensation obligations because of financial
circumstances.
The seafarers cost recovery levy will recover the costs of the Safety, Rehabilitation and
Compensation Commission, Comcare and the Australian Maritime Safety Authority in
performing their respective regulatory functions in relation to the Seacare scheme which
are not readily attributable to a specific organisation or individual.
The Bill forms part of a package of legislative reforms to modernise the Seacare scheme.
Human rights implications
The Bill does not engage any of the applicable rights or freedoms.
However, the Committee has previously raised comments around the engagement of the right to
an adequate standard of living with regard to taxation measures generally. For the purpose of
completeness, the assessment against that right has been included below.
Right to an adequate standard of living
Article 11 of the International Covenant on Economic, Social and Cultural Rights recognises the
right of everyone to an adequate standard of living for himself (or herself) and his (or her)
family, including adequate food, clothing and housing, and to the continuous improvement of
living conditions.
The Committee has commented that a change in tax rates could limit the standard of living
available to Australians.
The levies will be payable by employers in the maritime industry and therefore constitute a
business expense for those persons who employ seafarers that are covered by the Seacare
scheme. As such, payment of the levy by employers is unlikely to reduce an individual's
standard of living or have any direct impact on the adequacy of an individual's food, clothing
and housing.
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Statement of Compatibility with Human Rights
The Bill achieves a legitimate objective in that the levies imposed by the Bill will:
support a safety net for injured seafarers where the employer is unable to meet its
liabilities which, in turn, promotes the right to social security; and
ensure effective funding of new work health and safety arrangements of vessels in the
Seacare scheme which, in turn, promotes the right to safe and healthy workplaces.
Conclusion
The Bill is compatible with human rights as it does not raise any human rights issues.
Minister for Employment, Senator the Hon. Michaelia Cash
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Notes on Clauses
NOTES ON CLAUSES
In these notes on clauses, the following abbreviations are used:
AMSA the Australian Maritime Safety Authority
Bill Seafarers Safety and Compensation Levies Bill 2016
Levies
Seafarers Safety and Compensation Levies Collection Bill 2016
Collection Bill
Seafarers Act Seafarers Rehabilitation and Compensation Act 1992
Seafarers Bill Seafarers and Other Legislation Amendment Bill 2016
SRCC Safety, Rehabilitation and Compensation Commission
Part 1 - Preliminary
Clause 1 - Short title
1. Clause 1 provides for the short title of the Act to be the Seafarers Safety and
Compensation Levies Act 2016.
Clause 2 - Commencement
2. The table in this clause sets out when the provisions of the Bill commence.
3. Sections 1 and 2 commence on the day the Act receives the Royal Assent. The
substantive provisions commence on the same day specified in Part 3 of Schedule 2 of the
Seafarers Bill, that is, on 1 July 2017. Clause 14 will commence the day after Royal Assent to
allow time for the assessment provided for in that clause to be undertaken before the levies
commence.
Clause 3 - Definitions
4. This clause contains the principal definitions of terms used in the Bill. The definitions
of terms will be explained in the context of the provisions within which they appear.
Clause 4 - Extent of Act
5. This clause provides that the Bill will have extra-territorial operation.
Part 2 - Seafarers insurance levy
Clause 5 - Imposition of seafarers insurance levy
6. This clause imposes the seafarers insurance levy, assessed on the first day of a
quarter, on seafarer berths on a prescribed vessel normally used by seafarers employed by a
particular employer.
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Notes on Clauses
7. A quarter is defined in clause 3 as a period of three months beginning on 1 January,
1 April, 1 July or 1 October.
8. A prescribed vessel has the same meaning as in the Seafarers Bill, that is, a vessel
registered or required to be registered under the Shipping Registration Act 1981 or a foreign
vessel where the majority of the crew are Australian residents but excluding the types of
vessels specified in paragraphs (d)-(j) of that definition. In addition, the legislative rules
under the Seafarers Bill can declare a vessel to be, or alternatively not to be, a prescribed
vessel.
9. A seafarer berth is defined in clause 3 to mean a berth on a prescribed vessel that is
normally used by a seafarer to whose employment the Seafarers Act applies. The levy only
applies to seafarers employed by a particular employer. An employer has the same meaning
as in the Levies Collection Bill, that is, a person who employs one or more seafarers on a
prescribed vessel.
10. The note to the clause draws readers' attention to sections 25M and 25N of the
Seafarers Act, which set out the effect of an exemption under the Seafarers Act. Exemptions
under the Seafarers Act will also exempt the employer from paying the levies imposed by the
Bill.
11. Sections 107-109 of the Seafarers Act will govern the management and use of funds
raised by the seafarers insurance levy.
Clause 6 - Amount of seafarers insurance levy
12. This clause establishes the formula for determining the amount of levy payable for the
insurance levy. This is the product of the number of seafarer berths and the insurance amount.
The insurance amount is initially set at $15 and can be changed by regulations.
13. A regulation to change the insurance amount can only be made after a
recommendation from the designated actuary under clause 9 and the SRCC under clause 9A
have been made. These recommendations will establish the maximum rate which can be
prescribed by the regulations.
Clause 7 - By whom the seafarers insurance levy is payable
14. This clause provides that the insurance levy is payable by the employer who employs
seafarers who normally use the seafarer berths on a prescribed vessel subject to the levy.
More than one employer may be liable to pay the levy relevant to a particular prescribed
vessel.
Clause 8 - Designated actuary
15. This clause provides that the SRCC may, by written determination, specify an actuary
to be the designated actuary for the purposes of the Act. The designated actuary will
recommend the maximum amount that can be prescribed by regulation under clause 6 as the
actuarial component of the insurance levy.
16. For the avoidance of doubt, subclause 8(2) clarifies that a written determination under
subclause 8(1) is not a legislative instrument within the meaning of section 8 of the
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Notes on Clauses
Legislation Act 2003. This provision is declaratory of the law and does not amount to an
exemption from the Legislation Act 2003.
17. Subclause 8(3) requires the SRCC to publish the determination specifying an actuary
on the SRCC's website.
Clause 9 - Recommendation about the actuarial component
18. This clause provides that the designated actuary may recommend the amount of the
actuarial component of the insurance amount that should be specified, setting out reasons for
the recommendation. The designated actuary is required to have regard to the principle that
the amounts received under the actuarial component of the seafarers insurance levy are
sufficient to offset the costs of Comcare, as the default employer under the Seafarers Bill and
the premiums payable for a policy of insurance to underwrite the safety net fund established
under the Seafarers Act. The actuary must give the statement containing the recommendation
together with reasons to the SRCC who must then give a copy to the Minister. The Minister
must cause a copy of the statement to be published on the Department's website.
19. The recommendation made by the designated actuary establishes the maximum
amount of the actuarial component of the seafarers insurance levy that can be prescribed
under clause 6. The Governor-General, acting on the advice of the Minister, may prescribe a
lower levy rate. Subclause 9(4) makes it clear that the designated actuary must disregard any
government policy to establish a rate lower than full cost recovery. This avoids a possible
conflict for the designated actuary, who must recommend an amount that should be sufficient
to maintain the safety net fund, as set out in subclause 6(2).
Clause 10 - Recommendation about the administrative component
20. This clause provides that the SRCC may recommend to the Minister the amount of the
administrative component of the insurance amount that should be specified, setting out
reasons for its recommendation. The SRCC is required to have regard to the principle that
amounts received under the administrative component should be sufficient to offset the
expenditure incurred by Comcare in administering the safety net fund as the default employer
under the Seafarers Bill and administering the special account for the safety net fund. These
administrative costs relate solely to the safety net fund management and are separate from the
general administrative costs of the SRCC, Comcare and AMSA recoverable under the cost
recovery levy.
21. The recommendation made by the SRCC establishes the maximum amount of the
administrative component of the seafarers insurance levy that can be prescribed under
clause 6. The Governor-General, acting on the advice of the Minister, may prescribe a lower
rate. Subclause 10(4) makes it clear that the SRCC must disregard any government policy to
establish a rate lower than the amount sufficient to maintain the safety net fund. This avoids a
possible conflict for the SRCC, which must recommend an amount that should be sufficient
to cover the administration of the safety net fund.
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Notes on Clauses
Part 3 - Seafarers cost recovery levy
Clause 11 - Imposition of seafarers cost recovery levy
22. This clause imposes the seafarers cost recovery levy, assessed on the first day of a
quarter, on seafarer berths on a prescribed vessel normally used by seafarers employed by a
particular employer. The terms used in imposing this levy are the same as the levy described
in clause 5.
Clause 12 - Amount of seafarers cost recovery levy
23. This clause establishes the formula for determining the amount of levy payable. The
amount payable is the product of the number of seafarer berths and the cost recovery amount.
The cost recovery amount is initially set at $0 and can be changed by regulations. For clarity,
the term 'amount' is defined in clause 3 as including a zero figure.
24. A cost recovery amount cannot be prescribed by the regulations until the SRCC has
made a recommendation under section 14. The SRCC's recommendation establishes the
maximum amount which can be prescribed--a smaller or equal amount may be prescribed,
but not an amount above that most recently recommended by the SRCC. If a Seacare
Advisory Group has been formed, the SRCC must consult the Group before making a
recommendation (see subclause 14(6)).
25. The Government's intention is to phase in the cost recovery levy over the course of
four years. As the note to subclause 12(3) indicates, paragraph 12(3)(b) enables this to occur.
The SRCC will recommend an amount that would provide for full cost recovery, in
accordance with clause 14. The regulations will then prescribe amounts which are
progressively larger proportions of the amount recommended, with the amount prescribed
from the 4th year onwards being the amount recommended for a full cost recovery levy.
Clause 13 - By whom the seafarers cost recovery levy is payable
26. This clause provides that the cost recovery levy is payable by the employer who
employs seafarers who normally use the seafarer berths on a prescribed vessel subject to the
levy.
Clause 14 - Recommendation about the cost recovery amount
27. This clause provides that the SRCC may recommend to the Minister the cost recovery
amount that should be specified in the regulations, setting out reasons for its
recommendation. The SRCC is required to have regard to the principle that amounts received
under the cost recovery levy are sufficient to offset the expenditure incurred by the SRCC
and Comcare in administering the Seafarers Act and by AMSA, Comcare and the SRCC in
administering the maritime component under subsections 12(8A) of the Work Health and
Safety Act 2011. These costs do not include the administrative costs of managing the safety
net fund under the Seafarers Act, costs covered by fees charged under the Seafarers Act (for
example a fee for an application for an opt-in declaration, see clause 25B) or other
non-maritime related work health and safety costs.
28. The recommendation made by the SRCC establishes the maximum amount of the cost
recovery levy that can be prescribed under clause 11. The regulations may prescribe a lower
rate. This will enable the government's policy of phasing in the levy over four years to be
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Notes on Clauses
implemented. Subclause 14(5) makes it clears that the SRCC must disregard any government
policy to establish a rate lower than the amount sufficient for full cost recovery, as set out in
subclause 14(2). This avoids a possible conflict for the SRCC, which must recommend an
amount that should be sufficient for full cost recovery. If a Seacare Advisory Group has been
formed the SRCC must consult the Group before making its recommendation.
29. Because the substantive provisions commence after clause 14, subclause (7) sets out
transitional provisions to allow clause 14 to be given effect.
Part 4--Miscellaneous
Clause 15 - Regulations
30. This provision allows for the Governor-General to make regulations setting the
amount for the insurance levy under clause 6 and for the cost recovery levy under clause 12.
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