Peter Dutton (Dickson, Liberal Party, Minister for Revenue and Assistant Treasurer) Share this | Hansard source

I thank members in this place who have contributed to the debate on the Excise Laws Amendment (Fuel Tax Reform and Other Measures) Bill 2006, the Excise Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006, the Customs Amendment (Fuel Tax Reform and Other Measures) Bill 2006 and the Customs Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006. It is a very important debate.

I specifically thank the member for Page for his contribution and want to respond to a couple of issues that he raised. I note the member’s comments about the retention of maturation requirements for rum, brandy and whisky—and in particular rum and Bundaberg Rum, a great Queensland product. The satisfaction of the spirits industry with the outcome demonstrates the utility of the government’s commitment to consult with that industry—and with all industries, where feasible, on legislation that affects them. I thank the member for Page for his contribution to that end and for the way he has contributed to this debate otherwise.

This has been an important debate. Before I provide my summing up speech proper, I want to address some of the concerns raised by the member for Hunter. Only a couple of issues raised are relevant to the bills before the House, and they are the ones I intend to address. The member for Hunter spoke on the validation of the tariff proposal for reduction of excise and customs rates on aviation fuels. As the member for Hunter would be aware, it is a longstanding practice in excise and customs legislation that changes to rates are introduced by tariff proposals. This is covered in House of Representatives Practice. Excise and customs tariff proposals in themselves are not law; they work with other provisions of the legislation to allow duty to be collected by Customs or the tax office for a period of 12 months without legal challenge until the parliament considers the matter. These bills now legislate for the reduction of rates in the proposals. I suspect that that will answer the query the member for Hunter had on that issue.

The member for Hunter raised issues in relation to the change of treatment of aviation fuel. What I can say to the member for Hunter is that the cost is minor and was announced in the 2004-05 budget. The reduction reflects the cessation of cost recovery for the location pricing subsidy, as explained in paragraphs 1.127 to 1.131 of the EM. The renewable diesel definition implements the Prime Minister’s announcement of 31 March 2006 and is attached. This directly affects product to be made by BP at its Bulwer Island refinery utilising tallow, a renewable product, as an input.

These bills, along with the Fuel Tax Bill 2006 and the Fuel Tax (Consequential and Transitional Provisions) Bill 2006, give effect to the government’s announcement in its energy white paper Securing Australia’s energy future of 15 June 2004 that the current complex system of fuel tax concessions will be replaced by a single fuel tax credit system from 1 July 2006.

The Excise Laws Amendment (Fuel Tax Reform and Other Measures) Bill 2006 amends the Excise Act 1901 and makes consequential amendments to a number of other acts to implement a number of measures to streamline existing excise arrangements, protect the revenue and promote best practice regulation. It also amends the Energy Grants (Cleaner Fuels) Scheme Act 2004 so that fuel manufactured through a process of hydrogenating vegetable oil or animal fats receives the same tax treatment as biodiesel. This measure applies from 1 July 2006. The Excise Laws Amendment (Fuel Tax Reform and Other Measures) Bill 2006 also repeals the Coal Excise Act 1949, the Distillation Act 1901, the Fuel Blending (Penalty Surcharge) Act 1997, the Fuel Misuse (Penalty Surcharge) Act 1997, the Fuel (Penalty Surcharges) Administration Act 1997, the Fuel Sale (Penalty Surcharge) Act 1997 and the Spirits Act 1906, which are no longer required under the new system for providing fuel tax relief.

The Excise Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006 amends the Excise Tariff Act 1921 so that the mechanism of fuel tax relief for eligible users is through the fuel tax credit system legislated through the Fuel Tax Bill 2006 and not through concessions within the excise system. In particular, the fuel items in the schedule to the Excise Tariff Act 1921 are amended so that there are only two rates of duty—one for aviation fuel and one for other fuels. In conjunction with the fuel tax credit system, this will remove the effective excise on burner fuels and provide effective excise relief for a wide range of business users of fuel, including where fuel is used rather than as a fuel. This measure applies from 1 July 2006, but three items in schedule 1 relating to the validation of an excise tariff proposal apply from 1 November 2005.

The Customs Amendment (Fuel Tax Reform and Other Measures) Bill 2006 and the Customs Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006 make amendments to strengthen customs control over certain imported goods that are used in the manufacture of excisable goods to ensure that excise equivalent goods, certain alcohol, tobacco and petroleum products, are subject to the same duty when imported as is applied under the Excise Tariff Act 1921 for the same products when manufactured or produced in Australia. The amendments repeal customs related provisions of the fuel penalty surcharge legislation and replicate certain provisions of the Spirits Act 1906, the act which is to be repealed.

Presently, fuel tax relief is provided in the form of remissions, refunds and rebates under the Excise Act 1901 and the Customs Act 1901 and energy grants under the Energy Grants Credit Scheme. These schemes have restrictive and complex eligibility criteria and apply to different fuels and fuels used in different ways. The Energy Grants Credit Scheme currently provides a grant for the use of diesel fuel and alternative fuels in the case of the on-road credit in activities that are eligible for an off-road credit and an on-road credit. No credits are provided for the use of petrol under the scheme.

Remissions, rebates and refunds of excise and customs duties are also presently provided in prescribed circumstances and subject to prescribed conditions and restrictions. Remissions allow holders of a remission certificate to obtain prescribed fuel products fuel tax free for use in prescribed circumstances. Remissions and refunds commonly relate to solvent and burner fuel applications, kerosene for some specific fuel uses and diesel and petrol substitutes for non-fuel uses.

These bills contain positive improvements to the system of providing fuel tax relief, giving effect to the government announcement of major reform in its energy white paper Securing Australia’s energy future to modernise and simplify the fuel tax system. Further, the changes will lower compliance costs, reduce tax on businesses and remove fuel tax for the thousands of businesses and households across the country. When the fuel tax credit system is fully implemented, fuel tax will only be effectively applied to fuel used in private vehicles and for certain other private purposes and to fuel used on road in light vehicles for business purposes and aviation fuels where tax is imposed for cost recovery reasons. For the reasons I have outlined above, I commend these bills to the House.

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