Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Hansard source

The Fuel Tax Bill 2006 and cognate bill are important bills and bills we should have been debating the last time we were here. But I will come back to that topic at some point during my speech. The Fuel Tax Bill 2006 is complex, but it is broadly about three things. The first is moving business from the Energy Grants (Credits) Scheme onto the new Fuel Tax Credits Scheme. The second is promoting changes to the way businesses that are exempt from excise claim back tax paid on fuel. The third is putting in place the legislative structures required to give effect to the phasing in of tax or excise on LPG, CNG—that is, compressed natural gas—and biofuels, including ethanol.

The opposition has expressed support for the broad structure of the new fuel tax regime, which provides for: (1) a single system of fuel tax and associated credits; (2) reductions in the incidence of fuel tax levied on taxable fuels; (3) a staged introduction of a framework for the taxation of liquefied petroleum gas, liquefied natural gas and compressed natural gas from 1 July 2011—that was going to be 2009 originally, but, as a result of industry lobbying, particularly ethanol and biodiesel industry lobbying, it was pushed out to 2011; (4) a staged introduction of excise and phasing out of domestic assistance for biodiesel and domestic ethanol; and (5) the linking of fuel credits to environmental standards.

Under the fuel tax credits system, all taxable fuel acquired or manufactured in or imported into Australia for use in off-road applications for business purposes will become tax free over time. There will be effective tax-free status introduced over time for business off-road use. Petrol for off-road business use will also be eligible for a fuel tax credit from 1 July 2008. This is a part of the phase-in introduction. For off-road usage, the current Energy Grants (Credits) Scheme will be phased out from 1 July 2008, when a 50 per cent fuel tax credit will apply, and 100 per cent for petrol for uses that the current grants scheme recognises. However, the new tax regime will gradually impose a fuel tax for biodiesel, domestically produced ethanol, LPG, CNG and liquefied natural gas. This will be phased in from 1 July 2011 to 1 July 2015. This delay has been essential, as the industry argued, for the development of new capital projects as they work through their infancy.

In layman’s language, all of that means a couple of things. For many years in this country, we have had what used to be called a diesel fuel rebate—a proposition that applied to both off-road and on-road users of diesel. If it was used in business for business purposes, it was effectively tax exempt, and the tax was claimed back through the tax office. It is interesting to note that originally the principle lying behind the off-road process was that, because fuel taxes were hypothecated—that is, spent specifically on road funding—then people off-road should not be making a contribution to that funding model. Of course, over time, the rebate became extended to certain heavy on-road users. That has been a proposition that has enjoyed bipartisan support in this place for many years.

Not all that long ago, the diesel fuel rebate was replaced by what was called the Energy Grants (Credits) Scheme, and that changed the way business claimed back the tax, as well as making various changes to the regime, which I do not think we need to go into the detail of today. Now we are going to a new scheme called the Fuel Tax Credits Scheme, which effectively has the same net result. It is a different name, a different model, and there are some changes around the edges, including extending the rebate—if you want to call it a rebate—on petrol. I have made the point in this place that not too many vehicles driving around in this country are 4.5 tonnes or heavier and use petrol, so I do not know what benefit that is going to have for business.

Probably the most controversial aspect of this bill is the way it changes the way business claims back its tax. This is the reason why we are debating this bill this week rather than the last time we were in this place. At the moment, businesses pay for their fuel and, along with that payment, they pay the excise on that fuel. They are then immediately able to claim that back from the tax office. Rightly or wrongly, for some businesses this is actually cash flow positive. You might have a 14-day or even a 30-day credit arrangement with the supplier, and, if that is the case, it is more than likely that you are claiming the tax back before you have actually made the payment. Cash flow is a very important matter for businesses generally, but in particular for small to medium businesses. I certainly do not have a problem if some businesses have been getting a cash flow positive result out of the existing system. Whether they are or they are not doing that under the current system, if it is not positive cash flow, it is certainly a neutral cash flow if they have been able to claim back the tax at the same time, if not before, they have to pay the tax.

The proposal in this bill is to force businesses, including small to medium businesses, to wait until they lodge their BAS to claim back the tax paid on those fuels. You will appreciate that many small to medium businesses lodge a BAS on a quarterly basis, once every three months, while some only lodge one once a year. Once a year is less frequent, but quarterly is very typical. Under this proposal, you will have businesses carrying literally thousands if not tens of thousands of dollars for up to three months until they have the opportunity to claim that money back on their BAS. I had someone, whom I shall not name, suggest, ‘That’s not a problem, they can just lodge their BAS monthly.’ The people who say these things obviously know very little about the pressures faced by small to medium enterprises in this country.

The BAS is a nightmare, and I do not say that in a political sense. I am sure those on both sides of this place would acknowledge, whether or not they are supporters of the GST, that the BAS is now a fact of life—it is a part of doing business—and that the less often you have to do it the better. It is a significant burden on business and you would not want to do it once a month, so to suggest that businesses can fix the problem by lodging monthly is ridiculous and does not fall too kindly on the ears of those who operate those businesses.

This is a significant issue not just for the people you would typically think about in respect of this bill—those who are engaged in the petroleum industry and those who drive trucks or transport as part of their business—but for all of the associated people who are caught up in this regime. People in the plastics industry, for example, use petroleum based ingredients to make their products, and they will be caught up in these changes. So it is very significant. The impact that this will have on businesses around the country will go well beyond those whom we would think about in the first instance.

The member for Swan, when he speaks to this legislation, will highlight another issue that has just come to my attention: the prospect of some businesses being faced with tax for the first time. A representation has been made to the member for Swan by a business in his electorate. I will let him go into the detail and to name the business if he so wishes. This business simply buys and packages goods to on-sell to the supermarkets—for example, mineral turpentine, white spirits, kerosene, methylated spirits and thinners. The business says that it was not subject to this tax regime under the previous arrangements but it will be under the intended regime, which the bill we are considering today gives effect to.

I apologise to the minister for not seeking his imprimatur before I spoke, but I now seek leave to table the letter from that business so that he can look at the claims it contains. It is not a political letter in any sense. When the minister summarises the debate, he will be able to clarify whether the business that has written to the opposition is right in assuming the impact the bill will have on it.

Leave granted.

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