When is a law not a law?

financial law advisorWhen governments propose changes to laws, many people mistakenly believe that law is already in place. On the contrary, the path from proposal to law is not as straight-forward as you might think.

When an unpopular or contentious bill is announced, perhaps because of the attention it receives from the media, everyday Australians are sometimes led to believe the declaration heralds a done deal, but this is usually far from the truth.

Here’s a good example

As part of the 2014 Federal Budget, the government proposed raising the age pension age to 70 by 2037.

The announcement prompted an immediate frenzy of media and political commentary and many Australians understandably believed that this was now the law and with immediate effect. Amid the controversy average Australians were left confused and worried.

As a result of intervention from the then minor parties, the relevant bill has not been passed in the Senate. Now, three years later, it remains that the age pension age will increase to only 67 by 2023.

A more recent example is the reporting of changes to superannuation announced in the May 2016 Budget. After much to-ing and fro-ing, most of these bills were finally passed (with amendments) in November 2016.

This is how it works

The process of taking a bill from proposal to L-A-W law can be lengthy and quite tedious.

Bills are usually introduced into the House of Representatives by government ministers, although other members of parliament can introduce bills known as private members’ or private senators’ bills.

Once introduced to the House of Representatives they must be read aloud by the Clerk three times. They are then presented in identical form to the Senate, where they are again read aloud three times. The tradition of reading bills three times harks back to the days before printers, when the Clerk was responsible for ensuring the members of parliament understood the bill before casting their vote.

Bills must be passed by a majority vote in both the House of Representatives and the Senate. Where a bill is complex and/or creates lengthy debate, the process can become very drawn out and take weeks or even months. Although in certain circumstances, a bill can be passed in only days if the law change is deemed urgent.

The table below, shows the path a bill takes on its way to becoming law.

Discussion Progress
First reading – bill is introduced House of Representatives
Second reading – members debate bill House of Representatives
House committee – public inquiry House of Representatives
Consideration in detail – members discuss bill’s details House of Representatives
Third reading – members vote bill’s final form House of Representatives
Reported from Federation Chamber House of Representatives
Bill is passed House of Representatives
First reading – bill is introduced Senate
Second reading – members debate bill Senate
Senate committee – public inquiry Senate
Third reading – Senators vote Senate
Bill is passed in Senate Senate
Assent – Governor-General signs the bill Governor-General
Bill becomes an act of parliament Governor-General

In any given year, up to 200 bills are presented to Parliament and roughly 90 per cent of these become law. You can search for any bill before Parliament by going to www.aph.gov.au and searching under Parliamentary Business. It can be an interesting exercise.

Your financial adviser keeps up to date with proposed changes that are likely to affect you, and will be able to explain the details and confirm the changes when a relevant law is passed.

Sources:

www.aph.gov.au Parliament of Australia (Copyright Commonwealth of Australia)

www.peo.gov.au Making a Law (Copyright Commonwealth of Australia)

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.

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