Chris Bowen (Prospect, Australian Labor Party) Share this | Hansard source

The Fuel Tax Bill 2006 is an important bill—as is its associated bill, the Fuel Tax (Consequential and Transitional Provisions) Bill 2006with ramifications for farmers, small business people and people in rural and regional areas, particularly. It also has significant fiscal implications. There is no doubt that the fuel excise regime is in need of reform. It is currently complex, difficult to administer and difficult to understand, and some reform is welcome. However, there are aspects of this bill which cause me concern. I also note that this bill is significantly different from the one originally proposed by the government, thanks to the pressure from the opposition and from groups such as the Australian Chamber of Commerce and Industry.

This bill consolidates the range of fuel grants, credits and concessions into one single regime, and this is a concept which I find difficult to oppose. If the bill is passed, many users will be receiving the same level of tax rebate under different administrative arrangements, although it must be noted that some users will have their tax changed. This bill, for example, abolishes the Fuel Sales Grants Scheme which provides for a grant for sales of petrol or diesel of up to three per cent in non-metropolitan areas. This significant scheme costs some $256 million per annum, and the scheme’s abolition has significant impacts. It would be appropriate for a Senate committee to examine this aspect of the bill.

I referred earlier to the government’s significant backdown. In the bill’s original form, fuel tax credits would be claimed by businesses via the business activity statement in the same way as input tax credits are claimed for the GST, and this new scheme would be effective immediately. This means that a range of companies currently paying no fuel tax would now have to pay tax and then claim back the tax at a later time. You do not have to be a genius to realise that this would cause a major cash flow problem for small and medium sized enterprises especially, but apparently the government did not realise this. The problem for small business is especially apparent when you consider that businesses with a turnover of less than $20 million report their business activity quarterly and they would, under the system, have very significant delays before receiving their fuel tax back.

I was listening to the contribution of the honourable member for Hunter earlier today. He said that somebody had suggested to him that the way around that would be for small businesses to do their business activity statements monthly and not quarterly. That person obviously has no understanding of the burden of doing a business activity statement on a small business. They obviously have no understanding of what an onerous task it is and how the last thing small businesses need to be doing is to be preparing their business activity statements more regularly—monthly—in order to get back tax that they have paid and which they used not to have to pay at all. A recent audit report revealed that the Australian Taxation Office is unacceptably slow in processing business activity refunds, and this will make the effect of this change even more significant.

Labor agreed with the Australian Chamber of Commerce and Industry—I must say that we do not agree with them on everything but we certainly agreed with them on this—that this was unacceptable. We argued strongly that this aspect of the bill should be referred to a Senate committee for fuller consideration. The government has now partially backed down. The new arrangements mean that business will now have two years to adjust to the new tax regime. I note that the National Party have claimed this as a victory—and well they would; they do not have very many. However, it is actually a delayed defeat. The new arrangements will be implemented exactly as planned, just two years later. It does not fix the problem; it just puts it off for two years. While it is welcome that business will have two years to adjust to the new regime, other solutions should still be examined by a Senate committee. These should include the possibility of allowing companies with a turnover of less than $20 million to pay the tax after the business activity statement has been lodged.

I note that the tax office argued until very recently that this change was a necessary design feature. But it is apparently not so necessary that it is required for the next two years. It is not so essential that the tax office cannot survive for two years without it. That has to beg the question: if it is not essential for the next two years, is it essential for all the years to come? Given this anomaly, it is appropriate that a Senate committee examine the proposed changes to ensure that they cannot be further amended or to reduce or eliminate their adverse effects on industry. The tax office said that it was essential; now apparently it is not so essential. We need to see whether, if it is not so essential, it can be done without forever. We say: let a Senate committee have a good look at it and report back on the options. For all those reasons, all of division 3 of the bill should be referred to a Senate committee.

I would like to deal briefly with the taxation arrangements for alternative fuels, most notably ethanol. This new tax regime will impose fuel tax on biodiesel, domestically produced ethanol, LPG, compressed natural gas and liquefied natural gas. Of course it is appropriate that these fuels be taxed in the same way that other fuels are taxed, but it must be remembered that these fuels, particularly ethanol, are very much at the developmental stage and taxing them now could have the effect of killing this industry or at least very seriously affecting its development. That is why the tax regime will be phased in from 1 July 2011 to 1 July 2015. This is appropriate. Labor called for this and we support it. The government talks about being a supporter of alternative fuels, particularly  ethanol, and tries to paint Labor as not being in favour. But of course nothing could be further from the truth. I am glad that the government has listened to the calls of Labor and others and agreed to the phase-in of the tax on biofuels.

The matter of biofuels is also addressed in the second reading amendment moved by the member for Hunter earlier today, and I would now like to turn to that aspect. Australia is facing very high fuel prices, as is the rest of the world. It is incumbent on governments to encourage alternative fuels to reduce our reliance on foreign fuel supplies over time. This government has been reluctant to do it. Labor has a well-developed policy in this regard. The government has now adopted Labor’s plan to have the Commonwealth fleet—which is a very substantial one—running on alternative fuels. But of course much more can and should be done. It is being done overseas in places you would not naturally expect.

President Bush has authorised a $1.7 billion program to encourage hydrogen energy and fuel cell technology. Iceland is committed to becoming a hydrogen economy in 30 years time. The Brazilian experience is that you can have an effect on petrol prices by encouraging alternative fuels. That is why a Labor government would, for example, re-examine the depreciation regime for gas production infrastructure and allow the use of flow-through share schemes in the gas, oil and mineral exploration industries, which would enable some smaller operators to share the tax deductions and losses with their investors, making them more competitive in the battle for capital. In addition, we would make alternative fuel vehicles tariff free, cutting up to $2,000 from the cost of hybrid cars. Obviously, if you cut the cost of alternative fuel vehicles in this country, you improve the viability of the alternative fuels industry.

I would now like to turn to other aspects of the second reading amendment moved by the member for Hunter. Filling your car’s petrol tank can now cost you $100. In Sydney, which is the community I know, it would not be unusual for the average Sydneysider driving to and from work to fill their tank at least once a week. This is a massive cost blow-out for families. Especially in Western Sydney—which the member for Chifley referred to and which I also have the honour to represent—people who travel long distances into the city or across Western Sydney to get to their place of employment often have no choice but to drive, and this is a significant cost impost for them. Yet the government’s Western Sydney MPs wash their hands and say there is nothing that can be done.

As I have said in this House before, increases in fuel costs are an international phenomenon and they are primarily driven by increases in the cost of crude oil, but that does not mean the government is entitled to sit on its hands and do nothing. The government could be acting to reduce our reliance on foreign fuel supplies. Crude oil and refined petroleum combined are this nation’s single biggest import. As the Leader of the Opposition has pointed out, Australia currently relies on imports for 17 per cent of our overall petrol consumption. Seventeen per cent sounds reasonable; I thought it might be higher than that. Until I checked the figures, 17 per cent did not sound too bad. But the Australian Bureau of Agricultural and Research Economics calculates that this figure will rise to 46 per cent in 2020. This will be bad for our current account deficit and bad for Australian motorists.

The government could ensure that the Australian Competition and Consumer Commission ensures that price gouging is not occurring. The member for Chifley said that Labor believes the ACCC should have that power whether it likes it or not—and he is right. The chairman of the ACCC has said that he thinks something fishy is going on with petrol prices—and, if something fishy is going on, something should be done about it. Price gouging is not the main cause of high petrol prices but, even if it is adding to prices by a relatively small degree, Australian families deserve relief from it. The head of the ACCC has said that something fishy is going on with petrol prices and the Victorian Chamber of Manufactures believes that refiner margins are eight to 10c a litre higher than they should be. I agree with Senator Humphries, who said:

The relatively opaque nature of petrol prices means there is an opportunity for parties in the supply chain [to make] discretionary decisions about how much to charge to exploit motorists.

There are plenty of reasons why the ACCC should be closely monitoring petrol prices, and the Australian people who are filling up their tank every day know it. On the whole, I support this bill. I believe that division 3 should be referred to a Senate committee for the reasons I have outlined. I think the National Party has grabbed a deferred defeat, not a victory. Small business in rural and regional areas in particular have a lot to lose in the long run if division 3 is not amended.

I was attracted to an article in the Courier Mail on 15 May this year titled ‘Excise U-turn could kill industry’. President of the Queensland Seafood Industry Association, Neil Green, referring to this bill going through, said:

We are at the stage where we will go broke if this occurs.

He is right. Businesses throughout Australia, especially in rural and regional areas, are saying that. I say to the government: it is not good enough to put this off for two years. They are supposedly the champions of small business. They come into this House boasting and beating their chests saying, ‘We are the only ones who care about small business,’ yet they are introducing a tax regime which one industry association president says will send a significant number of his members broke and which small businesses throughout Australia have protested against. The best that this government can do is to say, ‘It’s okay, we won’t do it for another two years, until after the next election,’ which, by the way, is a very convenient result. The government should have the guts to fix this and fix it now and to be judged by small business on their performance—not to put it off on the never-never, not to put it off until after the next election, as they do on so many issues. They should deal with this now. They should face small business now and they should fix it now.

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