Joanna Gash (Gilmore, Liberal Party) Share this | Hansard source

I rise to speak on the Fuel Tax Bill 2006, the Fuel Tax (Consequential and Transitional Provisions) Bill 2006 and the additional amendment. Before I start, and while the member for Hunter is still in this place, I say to the member for Hunter: what hypocrisy to say that you started the ethanol projects when you were in government. If not the member for Fraser, who was it who killed the ethanol industry? The member for Fraser told a sob story in this House about a garage mechanic saying that ethanol caused problems in a car system. The owner of the car had to go through all the hassles of having his motor reformed. The truth is that the problems were not caused by ethanol but by kerosene. Did the member for Fraser have the guts to apologise to this House? No, not the member for Fraser. He hid behind his constituents and said absolutely nothing; it suited him not to say anything. Just remember that, member for Hunter.

I point out that some unintended consequences could occur with this legislation. I refer to statements made by Renewable Fuels Australia, the RFA. In particular, I want to address the issue of impacts, imports and market access with regard to biofuel operators if this legislation goes ahead in its present form. I have long been an advocate of the Australian biofuels industry and boast a significant Manildra ethanol plant in my electorate of Gilmore. Contrary to the member for Hunter, I am clearly on the record as being in favour of mandating ethanol in Australian fuel and have strongly supported the expansion of the biofuels industry. It is fair to say that we have taken some dramatic steps in the right direction, and for that I am very grateful. The agreement reached between the government and the oil companies is a substantial step in the right direction, but the proof will be in the pudding and we will all have to wait and see what the oil companies will do to meet their part of the agreement.

I also want to refer to the original proposal, the object of this legislation, which is that the proposed amendments to the Fuel Tax (Consequential and Transitional Provisions) Bill 2006 are intended to assist taxpayers to make the transition to the new fuel tax credit system by enabling eligible taxpayers to make claims for the early payment of fuel tax credits. In the context of the changes, the amendments will allow taxpayers a two-year transitional period to align their business practices to the new claiming arrangements and will ameliorate negative cash flow effects that may be associated with claiming fuel tax credits via the BAS. This is wonderful news for our fishermen in the Gilmore electorate, but it is also fair to say that in this Fuel Tax Bill the consumer is becoming more and more aware of the need to explore alternative fuel options and, with that, all support should be given to the Australian biofuels and ethanol industry.

I believe that support of the Australian biofuels industry can be strengthened within the Fuel Tax Bill 2006. In saying that, I would like to see the legislation (1) recognise the market barriers to ethanol and biodiesel fuels entering the mainstream transport fuel market prior to 2006 and ensure that applicable excise rates commence on 1 July 2016 and reach their final stage by 30 June 2020; (2) acknowledge the unique benefits of domestically produced ethanol and biodiesel by providing that any tax or duty imposed be incurred at half the rate imposed on imported ethanol and biodiesel; and (3) ensure that end user levels of diesel and diesel-like fuels meet the national diesel and biodiesel fuel quality standard and be treated the same in terms of tax credits and rebates.

The bill provides that alternative fuels that were previously untaxed would start their transition to their future tax rates from 1 July 2011 at specified annual rates of increase until their final fuel tax rate of 12.5c per litre for ethanol and 19.1c per litre for biodiesel by 30 June 2015. This policy was introduced in 2003 together with a range of measures designed to assist alternative fuels in establishing their place in the transport fuel market before the fuel excise tax regime was introduced between 2001 and 2015.

While alternative fuels such as LPG and natural gas have already established their place in the market and are able to enjoy this benefit, biofuels such as ethanol and biodiesel were not, due to fuel market entry barriers to ethanol and biodiesel that were not effectively addressed until 2006. Consideration must be given to measures that enable the biofuels industry to access these intended benefits and assist in stimulating new ethanol and biodiesel industry growth in Australia. This is consistent with government policy that a viable and sustainable biofuels industry is in the national interest of Australia.

In addition to the transition of previously untaxed alternative fuels to their final fuel tax excise rates between 2011 and 2015, it is proposed that restrictions on the import of alternative fuel would also be progressively removed between 2011 and 2015, at the same time as the transition to the rate of new fuel tax excise regime on alternative fuels. Whilst the formal tax rates are set at 25c per litre for ethanol and 38c per litre for biodiesel, alternative fuels were granted a 50 per cent discount in recognition of the benefits of domestically produced biofuels such as energy security, greenhouse reductions, carbon credits, rural and regional economics, jobs growth et cetera.

Imported ethanol and biodiesel make no contribution to domestic benefits. On this basis, the final excise rates for ethanol were set at 12.5c per litre for ethanol and 19.1c per litre for biodiesel but totally ignore the restricted policies of other countries that Australia will have to compete with. I believe that the measures I have stated for consideration would better acknowledge the nationally recognised benefits associated with domestically produced alternative fuels.

Today the Australian biodiesel industry has access to 100 per cent of the petroleum diesel fuel market and is supplying 100 per cent biodiesel fuel, a 50 per cent biodiesel blend with diesel fuel and a 20 per cent biodiesel blend fuel to on-road and off-road diesel fuel users in Australia which meet the national biodiesel standard and/or the national diesel fuel standard. Consideration must be given to my earlier stated points to avoid any circumstance that will deny biodiesel access to 70 to 75 per cent of the Australian diesel fuel market under the proposed road user charges regime. This embraces the off-road market, including agriculture and mining activities and the heavy transport market associated with vehicles over 4½ tonnes. Under this regime only a fuel containing a five per cent biodiesel blend with petrol will be deemed to meet the diesel fuel standards and thus be eligible for tax credits or grants. This would place Australia out of step with world practice and create a discriminatory, artificial industry and market barrier that will force biodiesel sales to the major oil companies and distributors via a B5 blended diesel fuel. Consideration should be given to guarantee equal treatment between petroleum diesel and alternative fuels such as biodiesel and, in the future, ethanol in the Australian diesel fuel market.

The issue of fairness in the biofuels industry is of utmost importance to those Australians who have invested heavily in local and regional areas, such as my electorate of Gilmore. I do not want to see $500 million and 285 direct jobs jeopardised. It has been a long hard road to rebuild consumer confidence with ethanol after, as I mentioned earlier in my speech, the deliberate scare campaign by members of the Labor Party to discredit not only ethanol—a large percentage of which comes from my electorate—but also the owner of our Manildra plant. In doing so, they succeeded in seeing 30 jobs go from Manildra in Bomaderry and many others in rural areas of Australia.

I note that Minister Macfarlane stated, from a recent meeting with the ethanol sector, that there are further plans to increase sales over the next two years by BP, United Petroleum, Woolworths, Caltex and Farmers Fuel. While all this is fantastic news, together with the reaffirmation of the target of 350 million litres by 2010, I would like to add my support to Minister Vaile’s comment that this date needs to be brought forward and that supply needs to be increased. With our ever-increasing fuel costs and growing demand, I feel that 350 million litres by 2010 is merely a drop in the bucket. Australia can and should do more to ease the crisis and, if that means imposing further voluntary demands on the oil companies, then so be it. One only has to look at our ever-increasing fuel deficit to realise that this trend cannot be allowed to continue. To increase tax on Australian produced ethanol and lower the cost of imported product is not the way to go. It concerns me to see how the large fuel companies can influence our policies.

On a closing note, I note that the ethanol industry in Brazil is quite advanced. If matters continue to unfold as they are, Brazil is set to become a major exporter of ethanol. By imposing extra taxes on our fledgling industry, we are in fact discouraging self-sufficiency and pushing towards a reliance on overseas imports. We have the capability here to be self-sufficient in ethanol and biodiesel, with the accompanying potential to export to other countries. Unless we encourage the growth of our home industry, we may well be consigning ourselves from the frying pan into the fire. We are a net importer of oil and, as our own supplies dwindle, this will inevitably increase. We need to look beyond immediate needs and adopt a longer term strategy that will not ransom us to overseas interests. To suggest that we ought to start taxing ethanol production from 2011 is to me a retrograde step and should be discounted.

It was in September 2005 that the Prime Minister and the Deputy Prime Minister announced that a viable biofuels industry was in the national interest and certain timetables and take-up use was committed to by Caltex, BP and Shell. It was these take-up targets together with the finally revealed tax implications of the Fuel Tax Bill 2006 that lead me to ask this government to rethink its policy by making further amendments and/or changes, as I stated earlier in my speech, in considering to extend by five years from 2016 to 2020 the transitional phase in percentage of excise of imports for biofuels.

Finally, I would like to mention the phase-in timetables for the biofuels industry entering the market in relation to the new excise/import regime. The take-up rate has been very slow. Already some six years have been lost. Therefore, there is a definite need to reconsider the phase-in period; if not, it could pose great difficulties for new entrants into the biofuels industry, as it will be some two to three years before new projects are completed. In speaking to this bill, I ask the government to consider some of the unintended consequences of this bill. I also remind once again the Australian people who it was that killed ethanol in this House.

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