EXPLANATORY STATEMENT
AUTOMOTIVE TRANSFORMATION SCHEME AMENDMENT ORDER 2013 (No. 1)
Overview
The Automotive Transformation Scheme Amendment Order 2013 (the Amendment) is made under the authority of regulation 3.12 of the Automotive Transformation Scheme Regulations 2010 (the Regulations). The Regulations are made under the authority of the Automotive Transformation Scheme Act 2009 (the Act).
The Act established the legislative framework for the Automotive Transformation Scheme (ATS) with the administrative detail set out in the Regulations and the ATS Order 2010 (the Order). The Amendment is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The ATS is the centrepiece of the Government’s $5.4 billion A New Car Plan for a Greener Future and encourages the innovation and investment necessary to place the Australian automotive industry on an economically sustainable footing.
The ATS is an entitlement scheme that provides cash payments to registered participants for strategic investment in research and development, plant and equipment, and the production of motor vehicles, engines and engine components. The ATS provides two types of assistance, capped assistance provided via a special appropriation and uncapped assistance provided via annual appropriation.
The Act provides that the total amount of capped assistance paid in an ATS year must not exceed $300 million. In addition, the Regulations provide that the total value of assistance, capped and uncapped, paid to an individual participant must not exceed 5% of the sales value of the ATS participant’s goods and services for the previous year, known as the sales-based cap.
Part 3 of the Order sets out the process for working out the amount of assistance to which an individual participant is entitled to for a quarter. This includes the calculation of a modulation rate and sales-based cap rate for a quarter in a way that ensures that the total annual amount of assistance paid does not exceed the annual cap, and individual participants do not receive payments in excess of their sales-based caps.
The need for a technical amendment to Part 3 of the Order was identified as a result of analysis on the degree of variation between the modulation rates for capped assistance between Quarters 1 to 4 of ATS Year 2012.
The level of variation in the 2012 quarterly modulation rates prompted a close examination of the modulation process, which identified that the calculation of the quarterly modulation and sale-based cap rates, and as a consequence payments, as set out in the Order could be improved.
Currently, the Order operates in a way that demand for the remaining (i.e. non-current) quarters of each ATS year can be over‑estimated because they are calculated before the application of a participants sales‑based cap rate. This can result in the over‑modulation (i.e. a lower rate) of capped assistance for a quarter, where participants could receive less assistance than they would otherwise be entitled to.
The Amendment changes the basis of calculating quarterly payments by calculating demand for the remaining quarters after the application of a participant’s sales-base cap rate. This prevents the over–modulation of capped assistance for a quarter, ensuring that participants receive the full amount of assistance that they are entitled to.
The Amendment will apply from Quarter 1 of ATS Year 2013.
Consultation
The Amendment has been developed with consultation between the Government and key industry stakeholders, including:
- the Federal Chamber of Automotive Industries (FCAI) and its members
- the Federation of Automotive Products Manufacturers (FAPM) and its members
Financial Implications
There are no financial implications arising from the Amendment.
Details of the Automotive Transformation Scheme Amendment Order 2013 (No. 1)
- Name of Order
Section 1 prescribes that the name of the Order is the Automotive Transformation Scheme Amendment Order 2013 (No. 1).
2. Commencement
Section 2 provides that the Order commences on the day after it is registered on the Federal Register of Legislative Instruments.
3. Authority
Section 3 makes it clear that amendments to the Automotive Transformation Scheme Order 2010 are made under the authority of the Automotive Transformation Scheme Regulations 2010.
4. Schedule(s)
Section 4 prescribes that each instrument specified within a Schedule to this Amendment is amended or repealed as set out in the applicable item in the Schedule and has effect as prescribed.
Schedule 1 — Amendments
Automotive Transformation Scheme Order 2010
- Subsection 3.2(1)
Substituted subsection 3.2(1) prescribes the new steps to be followed when calculating the modulation rate for particular quarters for MVPs. The amended subsection makes it clear that the steps for calculating the modulation rate vary depending on the particular quarter in an ATS year.
2. Subsection 3.2(2)
Amended Subsection 3.2(2) is a consequence of new step 6 for calculating the MVP modulation rate for a quarter.
3. Step 1 in subsection 3.2(2)
Substituted Step 1 sets out the process for working out the forecast capped and uncapped amounts for all MVPs for use in calculating the sales-based cap rate and the modulation rate for the current quarter in an ATS year.
4. Step 2(b) in subsection 3.2(2)
Substituted step 2(b) sets out the process for calculating an individual MVP’s capped amount for the current quarter in an ATS year.
5. Step 2(e) in subsection 3.2(2)
Substituted step 2(e) sets out the process for working out the total of the MVPs capped and uncapped amounts for the current quarter.
6. Step 3(c) in subsection 3.2(2)
Revised step 3(c) sets out the process for calculating the ceiling rate for an MVP for the current quarter in an ATS year.
7. Step 5 in subsection 3.2(2)
Substituted step 5 sets out the process for limiting the capped amount for each MVP for the remaining quarters in an ATS year. New step 6 sets out the process for working out the MVP modulation rate for a quarter in an ATS year.
8. Step 1 in section 3.3
Amended section 3.3 step 1 is a consequence of new step 6 in subsection 3.2(2).
9. Step 3 in section 3.3
Revised step 3 makes it clear that the rate obtained in that step is the ceiling rate for the current quarter.
10. Subsection 3.4(1)
Substituted subsection 3.4(1) prescribes the new steps to be followed when calculating the modulation rate for particular quarters for non-MVPs. The amended subsection makes it clear that the steps for calculating the modulation rate vary depending on the particular quarter in an ATS year.
11. Subsection 3.4(2)
Amended Subsection 3.4(2) is a consequence of new step 6 for calculating the non-MVP modulation rate for a quarter.
12. Step 1 in subsection 3.4(2) (heading)
The revised heading for step 1 makes it clear that the step works out the forecast capped amounts for all non-MVPs for use in working out the modulation rate for the current quarter in an ATS year.
13. Step 1(a) in subsection 3.4(2)
Substituted step 1(a) sets out the process for working out the forecast capped investment amounts for each non-MVP using the information included in the non-MVPs business plans.
14. Step 3(c) in subsection 3.4(2)
Revised step 3(c) sets out the process for calculating the ceiling rate for a non-MVP for the current quarter in an ATS year.
15. Step 5 in subsection 3.4(2)
Substituted step 5 sets out the process for limiting the capped amount for each non-MVP for the remaining quarters in an ATS year. New step 6 sets out the process for calculating the non-MVP modulation rate for a quarter in an ATS year.
16. Step 1 in Section 3.5
Amended step 1 is a consequence of new step 6 in subsection 3.4(2).
17. After Part 5
New Part 6—Savings and transitional provisions. New section 6.1 makes it clear that the amendments made by Schedule 1 of the Automotive Transformation Scheme Amendment Order 2013(No.1) do not apply to a calculation for, or referring to, assistance in the 2011 or 2012 ATS year.