Tony Windsor (New England, Independent) Share this | Hansard source

I know there are a number in the gallery who are very keen on hearing this. The article said:

WASHINGTON—The Big Three automakers pressed Congress on Thursday to help make ethanol fuels more widely available, saying that would be an immediate step toward lessening U.S. dependence on foreign oil.

Leaders of General Motors Corp., Ford Motor Co. and DaimlerChrysler AG’s Chrysler Group appealed to lawmakers—

the legislators—

for incentives to increase the number of gas stations offering blends of the corn-based fuel.

“If we want a game changer, and a game changer in very short term and in big numbers, then ethanol is a very good play for this country,” said Ford’s chairman and chief executive, Bill Ford.

The executives endorsed a plan to have renewable fuels meet 25 percent of the nation’s transportation energy needs by 2025.

That is what is happening in the United States. Another thing that is happening in the United States is that something like 20 per cent of the US corn crop this year will be turned to renewable energies, particularly ethanol. Some people who are not engaged in agriculture would not realise what 20 per cent of the US corn crop actually means. The United States produces something like 300 million tonnes of corn annually. I think the projected amount this year is about 285 million tonnes. Australia produces about 30 million tonnes of grain, sometimes a little bit more. Twenty per cent of 300 million tonnes means that 60 million tonnes of corn is being transferred from the grain market into the energy market. That is what the United States is doing.

We are introducing legislation such as this under the guise of it being a new way of looking at taxation credits—that is, credits, not taxation in itself. This legislation is about taxing energy, taxing fuel, taxing the use of fuel, taxing further down the track the use of renewable energies and bringing into the tax net some of the natural gases—that is, the compressed natural gases, the LPGs. That is what this legislation is about.

We are doing nothing to address some of the major issues that are confronting our nation, at a time when the Prime Minister and others are making great play of having an energy debate in this country—particularly in relation to nuclear energy. I am not afraid to have that debate. But why are we introducing legislation of this sort when we are trying to make up our mind on our long-term needs and after the sudden recognition that there are greenhouse gas problems in the world? We need to look at the long-term need for cleaner fuels, we need to look at the discharge of carbon dioxide and other small particle emissions and we need to preserve the globe for future generations. But we are introducing legislation such as this, which in effect penalises renewable energy. It does very little to encourage a phase-in period; it absolutely discriminates against biodiesel in 75 per cent of the diesel market, the heavy vehicle market and the farm sector market; and it patently discriminates against a renewable energy source other than the five per cent diesel blend. That is what we in this nation are doing.

I believe it is quite possibly one of the worst pieces of legislation that I have ever seen. It amazes me that someone for whom I have a great regard, the member for Hinkler, could allow such legislation to come into the parliament and then say: ‘Oh, it’s not quite as we would have liked. There is a compromise in this, but we’ve had a significant win in deferring the use of the BAS to generate the excise from farmers and others for two years.’ I cannot believe the National Farmers Federation and a group that I was a member of for many years, the NSW Farmers Association, are welcoming a deferment of a hanging. Two weeks ago those groups were saying: ‘This is dreadful. We need to do something about this.’ There are cash flow implications for the farm sector in moving away from the current system. The current system is that those who do not pay tax have to pay tax and then claim back again that tax that they do not have to pay. That is how the system works. The manufacturer or importer pays the tax when it comes in. We had this absurd system to start with, where a tax is paid and then it is rebated further on.

The existing system is such that, when a farmer for instance has fuel delivered, they can almost immediately make application for the reimbursement of the rebate. The change that is still in the legislation—and we hear it is going to be changed—is that the BAS would be used as a means of rebating the diesel rebate, the 38c a litre, as we see with GST at the moment. In some cases that would take at least three months and have enormous cash flow implications. The government, under great pressure, I am told, has decided that it will be deferring that decision until after the next election. That might get the National Farmers Federation and some others off the hook, but the country members of the government stand condemned for allowing legislation such as this to come into this parliament. A compromise of this nature is by no means sufficient.

There are a number of other issues in this bill. At a time when fuel prices are skyrocketing and having massive implications for all Australians, particularly country Australians, where you do not have the option of public transport and you have distance to contend with, the Fuel Sales Grants Scheme is removed as of 1 July. For those who do not know, the Fuel Sales Grants Scheme was put in place, quite rightly, by the government in 2000 to neutralise the negative impacts of a higher bowser price on country motorists, as compared to their city cousins, so that they would not be paying a greater GST on their fuel purchases. The National Farmers Federation, the National Party and many others lauded that at the time. I was in the state parliament at the time, and I thought: ‘At least they’re trying to equalise it. It’s a positive thing that country people won’t be penalised.’

This legislation removes that. As of 1 July, country people will pay more GST at the bowser if their retail price is higher than that of their city cousins, which it always is. They do not have the benefits of the competitive process and some of the benefits of fuel dumping from the refineries that occur from time to time. Country people do not have those benefits. Country people will pay from 1c to 3c a litre more for their fuel because of the removal of Fuel Sales Grants Scheme. I do not think that is fair.

I am also critical of the National Farmers Federation. During that debate, which took place last year, the National Farmers Federation were again dragged out to support the government on an issue. They wandered into the building with press releases saying, ‘We endorse the government’s initiative to remove the Fuel Sales Grants Scheme’—this is the Farmers Federation we are talking about—‘the neutraliser of the impact of GST on country people, because we believe it was an inefficient system and wasn’t getting to the people who were buying the fuel.’ Surprise, surprise, the National Farmers Federation are supposed to represent farmers. Farmers are able to claim their fuel usage through the system if it is for production. It is a cost of their business. The National Farmers Federation were prepared to accept an increase in fuel prices for all their nonmembers, knowing it was not going to impact on their members. That is a disgraceful act by that body, to give the government the sign-off on an increase in fuel prices to country motorists.

A couple of days ago, the member for Gwydir made mention on ABC radio in my electorate that the Fuel Sales Grants Scheme was an inefficient system, and there were various studies that indicated that and some that did not. If it was an inefficient system, why have we been subsidising the oil companies to the extent of $270 million for six years? For six years, there has been a transfer of income. If this has not been getting to the motorists by way of the equalisation of the impact of the GST, why has nearly $1½ billion been siphoned off to the fuel companies? That is the argument that is being used in relation to this. If it was inefficient at the start, why did they introduce it? Why did they not look at another way of it coming into effect?

I have mentioned the BAS deferment of the rebate for two years, when it will impact on BAS arrangements. But I would like to speak on renewable energy issues in this legislation. This legislation puts in place a platform that will wipe out the previously promised differential between imported and domestically produced ethanol and biodiesel. It will wipe that out. The government are saying they are encouraging the domestic investment in biofuels et cetera. The potential for the development of that industry is not being developed. They know that in a few years time the imported product will be on the same playing field as the domestic product and that this will essentially mean the death of any infant industry in relation to renewable energy.

The legislation, as I said earlier, absolutely discriminates against biodiesel blend in the farm and heavy vehicle markets, which are 75 per cent of the market. I intend to move a number of amendments tomorrow when the third reading proceeds, and one of those will be to adjust the transition period for renewable energies—ethanol, biodiesel et cetera. That was put in place in 2003 or 2004. There were various voluntary codes or agreements the Prime Minister had with the fuel companies. They have just been a stalling tactic from the fuel companies to make sure that no viable farm based industries, particularly ethanol and biodiesel industries, get underway. I will be moving that the transition period be increased so that there is a greater period of excise freedom for investment in this industry.

As I mentioned earlier, 20 per cent of the US corn crop is going to renewable fuels. I am not a great fan of President Bush, but he has woken up to this. Rather than being absolutely dependent on the Middle East and other parts of the world for fuel needs, Australia should be looking at what we can do to cut that corner in relation to our balance of payments imbalance. We are allocating about $1 billion per month to the balance of payments deficit from the importation of fuel. Domestically, we used to produce 32,000 megalitres. That has been reduced to 19,000; we import now. In the past five years, imports have gone up from 17,500 megalitres to 30,000 megalitres, so you can see why we are having difficulty with our balance of payments.

Brazil is expanding its ethanol production—it is producing ethanol from sugar, of course—at the rate of one Australian sugar industry a year. There has been a quite dramatic increase in canola prices. I thought it would have been the duty of the National Farmers Federation to try to put more money in farmers’ pockets. They have done nothing to promote renewable energies and the impact they can have. The European biodiesel market, for instance, has had an enormous impact on the global price regime for oil seed, particularly canola. That is the impact we could be experiencing here.

What we do in this nation is to grow grain at very low prices to enter corrupt world markets—and we have seen the fiasco in Iraq in recent months. We grow that grain and then take it out into a corrupt market. We receive some money for it. We then take out some of that money and enter another corrupt market—the oil market—which is controlled by very few people. Why don’t we cut the corner and create all those regional opportunities for investment and job creation—the very things that we talked about here today in question time? Why don’t we address these issues? The production of renewable energies by using things that our Australian farmers do well could have an enormous impact on the balance of payments. There could be a renewable energy source for our farming communities, grain producers, sugar producers and others within Australia. Whereas every other country that is producing ethanol or biodiesel has some protection at home, we have introduced legislation which will expose our producers to that market.

I listened to the member for Gilmore, and I have a lot of time for her. One of the few ethanol plants is in her electorate. I encourage members of the government to look at some of the matters she raised in her speech. I would encourage her to urge her Senate colleagues to really stand up on these issues and to speak out against the unfairness and bias directed at renewable energy providers. I would encourage the Prime Minister to revisit this issue. He has shown that, with logical argument, he will revisit issues—and we saw that with the Snowy Hydro. However, I do not think the Prime Minister is fully on top of this issue, which has been run through Treasury and has come into this parliament. Most people on the government benches do not really understand the longer term implications.

Another issue, which I think the member for Hinkler mentioned—I do not want to verbal the member for Hinkler; perhaps it was one of the previous speakers—was the government’s freezing of the fuels excise at 38c a litre. There is a nasty little fact in the back of this legislation that no-one to my knowledge has mentioned yet—a little thing called a ‘road user charge’. It will be up for annual change, which will be determined through ministerial discretion. Is this the back door to again ratcheting up the income from excise? The government has made great play that it has frozen the 38c a litre excise. Is this road user charge and the capacity of the minister of the day to change it—obviously in an upward direction—the way things will go in the future? In conclusion, I urge senators on the government benches—because the only senator that I have heard make sense in relation to this is Barnaby Joyce—to look seriously at this legislation and change it so it will actually work. (Time expired)

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