Michael Hatton (Blaxland, Australian Labor Party) Share this | Hansard source

We are talking about very complex legislation in this cognate debate on the Fuel Tax Bill 2006 and the associated Fuel Tax (Consequential and Transitional Provisions) Bill 2006. The reason it is complex is that the number of provisions that are involved are significant. Also, there is a series of interleaved movements so that, over time, the changes that are indicated, which are outlined as a reform package, will be undertaken in different years, finishing by about 2012, so that a final, new fuel taxing regime will be incorporated. It has been indicated that one of the alternatives to undertaking this set of steps, which replaces the government’s former scheme, was to simply introduce a GST on fuel. Why didn’t the government do it? Instead of a 10 per cent GST, I would hazard a guess that, in order to keep it in line with the higher taxation level on fuels across the board, there would have had to have been a second rate of GST. For those people in business it would have been much simpler to introduce the idea that business inputs could be taken into account and that fuels, whether diesel, liquid natural gas, LPG or petrol, could be taken as a business input. Under the GST system they would be effectively put aside, because you could take account of that as part of the costs and, even if it were at a different level, for a business that would be easier and simpler. For the government it would be harder, because it would introduce a layer of complexity.

Instead of that, we have this new regime which takes us almost to segue with the government’s existing legislation through to this new set of reforms over an extended period. I will outline just simply what the major reform is. The bill constitutes major reform of fuel taxation in Australia, providing for a single system of fuel tax and associated credits; reductions in the incidence of fuel tax levied on taxable fuels; staged introduction of a framework for the taxation of liquefied petroleum gas, liquefied natural gas and compressed natural gas from 1 July 2011; staged reduction in tax assistance for biodiesel and domestic ethanol; and linking of fuel credits to environmental standards. In fact, the actual implementation is extended over a significant time. In their paper Securing Australia’s energy future, produced in 2004, the government indicated that excise on burner fuels would be removed at the start of the next financial year, on 1 July 2006; on 1 July 2008 a 50 per cent credit would be introduced for the off-road use of taxable fuels in activities not previously eligible for credits; and three years on, in July 2011, effective excise would apply on all fuels used in internal combustion engines. I will come back to that matter later because it deals not only with petrol and diesel but also with liquefied petroleum gas and others. On 1 July 2012 full credit would be extended to all business use of all taxable fuels in all off-road activities and on 1 July 2015—I was three years out—final effective fuel excise rates would apply to all taxable fuels, including a 50 per cent discount for alternative fuels.

In terms of the government’s intention, it is a case of moving from here, or where we were previously, forward to 2015 to a new regime—moving from one set of energy credits in their previous legislation to this new fuel regime. But it also involves taking a category of alternative fuels not previously subject to excise and imposing excise on them—that is in 2011, and that is significant. I want to come back to that later, because it relates to the broader question of alternative fuels in Australia and to the significant investments that have been made in Western Australia by a number of companies in liquid natural gas and, in particular, to the investments that have been made near Barrow Island, where we have the biggest, most significant liquid natural gas find in Australia’s history. The order of magnitude of the fields involved is quite staggering, and how that energy resource is to be treated and how long it will last is of immense significance. That is not specifically dealt with here except to bring it into this excise regime. The government say that they want to simplify the whole process. They made a series of announcements in 2003 and 2004 of a series of schemes. It will be a long process, because we are looking at a nine-year period for the changeover. There will be differential impacts on various parts of the transport industry, which is already suffering significantly with the cost of fuel.

In my electorate of Blaxland we have a large number of heavy haulage companies—for instance, Thomas National Transport at Villawood. I have spoken to members of the union there, and also to the manager, about the government’s independent contractors bill, which I think is yet to come before us—and I will be speaking later on that legislation. The people working there told me that they were under a great deal of pressure because they are employees of the company but have had to buy their own rigs and pay for their own fuel. Diesel, which once was very cheap, is now extremely dear and, at the very top of the range, it is not subject to the discounting that you normally get. That is a great impost on them and a great uncertainty. As well as that, they had the uncertainty—which has now been clarified for a year—of what their future status would be and also the uncertainty of working out the effects of inflation, increasing interest rates and so on. They know that certainty in the area of fuel tax and excise is important and significant. They also know that they tend to be left out a lot in the consideration of the impact on ordinary working people. As owner operators these people have invested a great deal of money into their businesses and they are hit with a whole range of measures. I trust that they will not be detrimentally hit by this. Of course, if in a year or so they end up as independent contractors as a result of another bill the government might bring forward—the government has said people in New South Wales and Victoria will not be incorporated—they will be on the significantly increased end of these changes.

We are supporting this bill and the series of complex changes involved. But we are also saying, ‘Hang on a minute, this is not just about tax change; it is about a whole series of other measures.’ I support the amendment which the shadow minister and member for Hunter, Mr Fitzgibbon, has put forward. I want to read a part of the amendment to give you a flavour of what this amendment is about—and I will return to another section of it. The amendment states that the opposition:

(1)

condemns the Government for failing to properly consult with commercial fuel users on the appropriate model for payment of fuel tax;

(2)

condemns the government for circulating major amendments less than two hours before debate on the Bill is to be resumed;

That is not the right process, but it happens again and again. The government has been in power for over 10 years. It has not properly consulted all the people who will be directly impacted, despite the fact that these measures have been under way for such a significant time. It is a further indication of the manner in which this government treats the opposition and the parliament. Where major and significant changes are to be brought in, the government pumps them into the House without consultation with the opposition and without time for the opposition to adequately look at them. Then the government says, ‘You can support the bill and you can support these amendments as well, without adequate time to make an assessment of them.’ I do not think that is an appropriate way for the government to conduct its business. It is discourteous to the parliament and its members. In fact, it is not part of good government or good governance. But there are much deeper problems here. In the third element of the amendment, the opposition:

(3)

calls upon the Government to reduce our dependency on foreign oil and to promote:

(a)

existing alternatives like liquid petroleum gas, ethanol and biodiesel;

(b)

emerging alternatives such as compressed natural gas, liquid fuel from gas and stored electricity; and

(c)

future fuels, such as hydrogenas Labor has committed to in its Fuels Blueprint;

We have a blueprint; we have a plan. We have thought about these issues of Australia’s energy needs. We have supported companies coming in from overseas, investing in Australia, making significant finds and trying to exploit those finds. We have also encouraged Australian initiatives to do exactly the same thing, and we have encouraged Australian shareholders and Australian workers to be part of that.

I and other Labor members accompanied the shadow minister and member for Batman, Martin Ferguson, to look at the Jansz field—the biggest fuels infrastructure project Australia has yet seen—and associated fields just off Barrow Island. It just so happens that Claude Killick, the president of the Condell Park branch of the ALP in my electorate, went to Barrow Island before I did. He did a number of things during his working life. He was on a small ship, captained by an American, with other Australians on the crew. They were looking for oil off Western Australia in the 1960s. The ship was beached on Barrow Island and it took them a significant time to get it off. After they did get the ship off, they continued to look for oil reserves around that area. Claude Killick told me that he saw in the 1960s the immense gas fields around Barrow Island. He was privy to this because the people who worked the seismographs were able to tell him what was happening. He saw the Jansz fields that are being exploited—our most significant infrastructure development yet—and the associated Gorgon fields close to Barrow Island. The company behind this is already committed to further exploration in closely associated fields. The expectation is that this particular development on its own will allow Australia to be independent of gas from overseas for in the order of 60 years and possibly 100 years.

We know how significant our export of LNG has been over the past five to six years—big contracts have been won, at a cost certainly, with China, and with Japan and other countries—but we also know that continued investment by Australians and overseas investors to develop resources such as in the Gorgon and Jansz fields and the associated fields up the West Australian coast is immensely important. It is important that the government has a plan not only to tax in a simpler way but to further explore and exploit that. The government needs to have a plan to go beyond imposing excise on fuels that did not have excise. That is what it will be doing come 2011 in its program. If you look at the specifics of it, the excise will apply to all fuels using an internal combustion engine, including concessional excise for biodiesel, ethanol, liquefied petroleum gas, liquefied natural gas and compressed natural gas. The effective excise rates will increase over five equal annual steps, reaching their final rates on 1 July 2015.

This is part of a regime to take taxing in this area from the old into the new era over a nine-year period—it has been conceived prior to that—but it actually complicates the whole issue of how we might most wisely use our greatest resources. The Prime Minister for his own ends is attempting to start up a debate on nuclear power. We have immense resources of coal and we are a major exporter. Our future is in finding a way to more effectively use and sell cleaner coal—a coal where its CO product can be sequestered. Though not associated with coal, the project on Barrow Island to do the proving for sequestering CO from those liquid natural gas finds has already cost $36 million. One of the things that companies have to put their money into to be able to march forward is in this problematic area of climatic change. The significant problem for Australia is to clean up our coal for export to secure long-term sales not only to existing customers but to future customers and in a way where climate change is not affected in the way it is now.

One of the ways we can more effectively do that is by using gas, which we have in immense abundance, as recent finds have demonstrated and as Woodside in its activities in Western Australia in the fields further to the north has indicated. That immense richness is not incorporated into the centre of Australia’s fuel use. We are still highly dependent on diesel and petrol. We are still in a situation created in the sixties with the development of the Bass Strait fields and others and with the later move towards world parity pricing for fuel in order to encourage companies to find more petroleum and other fuels in Australia. We have not appropriately looked at how fuels might be more differentially taxed and how Australia might move forward in a planned way to less reliance upon petrol and diesel and greater reliance upon what we have in most abundance. We certainly have coal in great abundance, but we also have liquid natural gas and its associated forms in tremendous abundance. So it would be natural for Australia, would it not, to encourage its use in cars and trucks and other forms of transport by having an appropriate tax regime instead of imposing extra excise and boosting that up over a period five years or so? We should have a plan which says that, given our immense riches, one of the key things Australia should do to decrease the use of current fuels is to move to use natural gas in its variety of forms, particularly in transport.

The second thing we could do is to purify the output of existing power stations by encouraging a far greater use of natural gas as the agent for a brighter burn for those coal fired power stations. The technology is there. It is being done in some places. We need to look at the whole question of retrofitting technology to reduce emissions of CO which are creating climatic problems. What we have in most abundance, coal and gas, could symmetrically be used to decrease the problems we are creating for the environment. That kind of planning and that kind of thinking is outside not just these tax changes but the whole purview of the government in this area. They have not planned forward. They have planned how to cut and hack back and let the market have its run, as the member for Oxley said, but they have not positively worked on a taxation scheme to change the way tax is done or on a plan for the future energy needs of Australia. (Time expired)

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