Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Primary Industries, Resources, Forestry and Tourism) Share this | Hansard source

I rise today to speak on the Fuel Tax Bill 2006 and the Fuel Tax (Consequential and Transitional Provisions) Bill 2006. In response to the member for Gilmore with respect to the ethanol industry, I want to say this: this House is generally supportive of the ethanol industry. It is about time that some ethanol producers understood and accepted that, whilst we are supportive of the development of the ethanol industry, we are not supportive of their endeavours to intimidate refining companies in Australia into purchasing not ethanol but their product, representing imported oil including ethanol, so as to maximise their own profit and their own dividends. If those producers want support for ethanol, let us sell ethanol and not let it be about them trying to intimidate industry into purchasing their refined product inclusive of ethanol, which is what they are currently seeking to do with respect to some of the oil refining companies in Australia and outlets around Australia.

Having said that, I think—and I am surprised the member for Gilmore did not comment on this—it is unfortunate that this debate is occurring at this time. The government has proposed significant amendments to the bill but, in a flagrant abuse of courtesy to the parliament, the amendments were only available two hours before the debate commenced today. Not only has the government provided insufficient time for proper review and consideration of the proposed amendments but we are debating these bills before the Senate Economics Legislation Committee has completed its inquiry into them—an inquiry going to some of the concerns raised by the member for Gilmore.

Again, I believe the government is making a mockery of parliamentary process. The Senate inquiry had the support of members in this House but, for the purposes of this debate, the government is requiring members of the House to ignore that inquiry and anything it might find that might go to the application of the bills once they become law. The committee’s report on the inquiry will not become available until this afternoon, we are told. What message does that send to the 32 organisations and individuals who made written submissions to the inquiry and to the many who appeared in public hearings before the Senate Economics Legislation Committee? It simply sends a message that this government, in an arrogant way, will only pay lip-service to parliamentary processes. They could ask, ‘Why bother? Why waste our time in the future?’ I simply believe that the least the Australian electorate and the peak bodies that represent varied constituencies should be able to expect is that the government follows due process. What confidence can those organisations have in a parliament that flagrantly disregards due process?

It has taken two years to get from the last policy pronouncement to the introduction of these bills into this parliament. It is laughable to now suggest that there is such urgency that debate cannot wait until tomorrow or the day after to enable us to properly review the outcome of the Senate reference. I remind the House that it has taken a long time to get this legislation. The initial policy announcements date back as far as the 2003-04 budget, culminating in the June 2004 energy white paper. These bills are just another example of the tardiness with which legislation is being handled by the government. Just look at the backlog of the legislation before the House. The standards of the House and the Senate are something that I would expect both sides of politics would want to uphold. I ask members on both sides to take a firm stand and to put an end to the sloppiness and stop the slide with respect to the performance of the House and the Senate. I believe we owe it to our constituents.

Let us go to the bills. One of the key features of the proposed reforms is to implement a four-band fuel excise system loosely—and I emphasise loosely—based on energy content. The bands define fuels as having high-, medium- and low-energy content and there is a fourth band for other fuels such as compressed natural gas. Federal Labor supported the proposal to extend the effective excise-free period for biofuels and the LPG industry by three years until 2011 and has supported legislation to introduce mandatory cleaner fuel standards that should benefit environmentally friendly fuels and benefit the Australian community generally with respect to the debate about a clean environment. However, whilst Labor supported this approach, I remind the House that the overwhelming reason was to provide some certainty for the alternative fuels industry and refining industry. That is the crux to investment in Australia—certainty in the legislative environment that industry confronts in making investment decisions.

It is also important, contrary to the views suggested by the member for Gilmore, that we put on the record that federal Labor has always supported the alternative fuels industry. It is interesting that the member for Gilmore, who was elected in 1996, did not raise the issues that I now seek to remind the House about. It was the Keating Labor government which introduced an 18c a litre production bounty for ethanol in the 1993 budget in addition to the zero excise rating for the product. The Howard government abolished the bounty scheme one year early in the 1996-97 budget, the first budget the member for Gilmore had to respond to, and it has consistently undermined the industry since by changing the playing field on a regular basis. In the last parliament alone the Howard government changed its mind three times on the excise regime for not only ethanol but also LPG. And they talk about certainty for the purposes of encouraging industry investment in Australia’s long-term future! The record of the Howard government on this very important industry has been the lack of certainty it has put in place.

Despite his May 2002 view that applying excise to ethanol and LPG was a bad idea, the Treasurer announced that he would do just that in the 2003 budget. He announced that biofuels and LPG would be subject to excise from July 2008. In December 2003 he changed his mind yet again, announcing a new excise regime to apply from July 2011. Between May and December 2003 the LPG industry was in absolute turmoil—and one can understand why. Many of the small business operators involved in LPG conversion and maintenance suffered serious business downturns due to the uncertainty about the excise regime. Of course, the biofuels industry also suffered during this period, with no certainty for new investors in the industry. And the member for Gilmore wants to talk about certainty in the industry! With the problems in the industry because of the lack of strong direction and certainty from the Howard government over the last 10 years, it has taken some time for the industry to recover. It has recovered mainly because record-high petrol prices have meant that consumers have been more willing to set aside their concerns about fuel tax uncertainty than they would otherwise have been and that biofuels are now more price attractive to refiners and marketers. The history of the Howard government’s double backflips on alternative fuels—and they amounted to double backflips—is in stark contrast to the stability of Labor’s position throughout its 13 years in office, when it maintained the LPG excise exemption introduced in 1979 for fuel security reasons.

The other stark contrast is the Prime Minister’s interest in fuel security back in 1979 compared to his complete lack of interest today as Prime Minister, when fuel security has never been so important and petrol prices have never been so high. As I have said before, this government treats tax cuts as ‘go away’ money for motorists worried about petrol prices. It has no long-term vision for where we are going with the very serious challenge of fuel security for Australia. It is the debate and the new Cold War internationally. It is where we really are in the global community at the moment in terms of energy. Energy is the cause of tension in the global community. Yet we found nothing in the recent budget to bolster Australia’s fuel supply security or to look to the long term. The fact is that, without developing large-scale alternative fuel industries in Australia, we will increasingly be hostage to supplies from the Middle East, West Africa and Russia—and, frankly, who would want to put our future in the hands of the instability that currently exists in the Middle East, West Africa and Russia? We need long-term government action now aimed at securing Australia’s future and the future of our children and grandchildren. We should not leave Australia to be held hostage to the Middle East, West Africa and Russia. It is about time the Prime Minister understood those concerns, which are widely held by Australian industry and ordinary householders. I do not need to spell out the implications of that for energy security.

Australians around the kitchen table tonight want to know that their governments and the companies with stewardship of their resources have a plan to secure their energy supplies for the future at affordable prices. That is what ordinary Australian households are concerned about at the moment—security at reasonable prices. But there is no plan by the Howard government and, therefore, those people sitting around the kitchen table this evening are not relaxed and comfortable with the lack of the Howard government’s action on fuel security and Australia’s medium- to long-term interests. Creating the right fiscal and regulatory regime to make gas to liquids a new industry option and a new fuel supply source for Australia is just not on under the Howard government, and it ought to be.

The Prime Minister was thinking about energy security in 1979, but it is not on his radar in 2006. Despite its enormous potential for Australia—and it is enormous—the Prime Minister has decided to tax gas to liquids diesel as a high-energy fuel with no discount as an alternative fuel. Unlike other alternative fuels, he has done nothing to provide any industry framework to encourage the establishment of the gas to liquids fuel industry in Australia. The Labor Party, alternatively, has always been a strong supporter of both gas to liquids and coal to liquids. This is, of course, interestingly about the commercialisation of clean coal technology for power generation in Australia, which is about the greenhouse debate and the environment debate whilst also giving us a sense of security with respect to access to fuel for the future.

I can recall the former Prime Minister, Paul Keating, as the resource minister over 20 years ago, being a great advocate of gas and coal to liquids technologies. He was ahead of his time on this issue. Similarly, we pursued this issue in the last parliament with the position of Joel Fitzgibbon, the former shadow minister for resources, and we will continue to pursue it because we believe establishing new nation-building industries is not easy. It requires more than anything sustained leadership, a focus at the national level, to actually make it happen. It requires leadership and determination, something that the Howard government lacks with respect to this major challenge.

I also remind the House that there is a more recent history. It is now almost five years since Senator Minchin, who was then the Minister for Industry, Science and Resources, appointed a gas to liquids task force to investigate the feasibility and benefits of establishing a gas to liquids industry in Australia. So the Prime Minister might not have much interest, but there is a little bit of form on the other side in the actions of the former minister for resources, Senator Minchin, to actually consider the gas to liquids industry. But, despite that report, five years on no action has been taken. Our reliance on imported oil and fuel is increasing and, while the LNG market is booming, it remains a tough job to get new gas projects off the ground in Australia.

Senator Minchin’s task force noted that, while Australia could simply wait for the market to provide an incentive for a gas to liquids industry, once gas supply infrastructure is in place and investment is sunk in other countries where taxation infrastructure incentives are on offer today, those countries will serve as investment hubs for expansion for many years to come. It is about focusing on potential lost opportunities that would be lost for many years to come. Unfortunately, that is what is happening. Just go to Qatar to see whether the findings of the task force are actually happening at the moment. The implication of the task force was that Australia’s remote gas fields could be left stranded from markets for even longer because, by and large, it will be cheaper to expand existing projects than to build new ones here. I am sure this is a concept Australia’s LNG industry already fully understands.

The task force highlighted the potential significance of a gas to liquids industry to Australia’s economy, saying it could underwrite offshore gas supply infrastructure to bring forward the possibility of major new domestic gas pipelines to connect the national market, increase domestic gas competition and energise gas exploration—a pretty important challenge and objective for Australia. The task force said:

These benefits would be of national strategic significance to Australia.

It further went on:

The cost of any government intervention must be considered against the potential benefits.

The potential benefits, as we all appreciate, go beyond unlocking new resource wealth and creating new industry, more jobs, more apprenticeships and more exports. They include the opportunity for Australia to address this most pressing problem of all: our future transport fuel security. When do you ever hear the Prime Minister addressing our future transport fuel security? It was not addressed in the recent budget and it is not being addressed by the Prime Minister today.

It is also interesting that three years ago a CSIRO report, Energy and transport sector: outlook to 2020, laid out its proposed strategy for Australia’s transport future. It defined that strategy as one that identified gas to liquids and coal to liquids as the keys to our future transport fuel security. It was not just the opposition, it was not just Senator Minchin, as the then minister for resources; it also included CSIRO. The report said:

The global future for evolution of transport fuels and vehicles is driven by greenhouse gas and oil supply issues and is very uncertain. Australia’s strategy must be flexible and segmented. The proposed strategy, offering a 60% reduction in GHG, decreased dependence on oil and a platform for future H use, involves:

• Migration to diesel, using best practice technology and fuel standards;
• Production of “clean” diesel from natural gas or coal with CO sequestration;
• Development of hybrid cars and light vehicles, fuelled by diesel.
• Niche segments may be developed for compressed natural gas, with the added advantage of commencing infrastructure options for future hydrogen-based systems.

These are all current issues in the debate not only about nuclear, clean coal technology and solar energy but also about where we as a community will achieve security with respect to transport fuels.

The tragedy is that we can all see the potential but that the reality remains just beyond our grasp. Without sustained and committed national leadership to deliver the right policy settings and the right fiscal environment—that is about government policy, if the House does not understand it—it will remain beyond our grasp. It will leave us open to pressure from the Middle East with respect to future access to transport fuels. I am not prepared to risk Australia’s future in the face of the instability that currently exists in the Middle East. Just look at the price of oil in Australia at the moment.

Therefore, I suggest it is time for the Prime Minister to seriously review the petroleum resource rent tax regime and, in doing so, consider special treatment of capital investment in gas to liquids projects and associated gas production infrastructure. The Prime Minister should be facing up to some responsibility for resource related infrastructure instead of passing the buck to the states. In that context, he should think about the dividend to the Commonwealth from the potential Gorgon project—a huge dividend to the Commonwealth that could be ploughed back into the development of this industry. Above all, the Howard government should be sending a clear signal to Australians that it is interested in their future fuel supply security and will not deliver it to the perils of the Middle East. The Prime Minister should be sending a clear signal to industry that we want a gas to liquids and coal to liquids industry as part of Australia’s national energy strategy.

I return briefly to the objectives of these bills. The opposition welcomes the measures in these bills and proposes amendments that provide for a more appropriate framework and administrative regime for providing credits for business fuel use. However, the government is to be condemned for failing to properly consult with commercial fuel users on the appropriate model for payment of fuel tax and for its failure to understand the implications of the workings of the BAS on cash flow in small and seasonal businesses. I commend the second reading amendment to the House. (Time expired)

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