Harry Jenkins (Scullin, Australian Labor Party) Share this | Link to this | Hansard source

The original question was that this bill be now read a second time. To this the honourable member for Hunter has moved as an amendment that all words after ‘That’ be omitted with a view to substituting other words. The question now is that the words proposed to be omitted stand part of the question.

Geoff Prosser (Forrest, Liberal Party) Share this | Link to this | Hansard source

I will continue in the debate on the Fuel Tax Bill 2006. Under the Greenhouse Challenge Plus program, member businesses must measure their greenhouse gas emissions, develop action plans for greenhouse gas abatement and report to the government on their actions. The government recognises that making greenhouse management a core element of business is important to finding cost-effective solutions to the long-term greenhouse response. Membership of the Greenhouse Challenge Plus program signals an expectation that very large users will participate in an active partnership with government to address climate change. The program complements the government’s other energy and greenhouse gas abatement measures addressing very large energy users.

Where a taxpayer becomes a member of the Greenhouse Challenge Plus program, they will be entitled to claim fuel tax credits for taxable fuel they acquired or manufactured in or imported into Australia before they joined the program by making a decreasing fuel tax adjustment for the amount of fuel tax credit that they were previously not entitled to take into account. The decreasing fuel tax adjustment will take into account the credits the taxpayer was previously not entitled to, up to five years prior to the end of the financial year in which they became a member of the program.

A further environmental measure is compliance with emissions performance criteria by vehicles using diesel fuel in on-road applications. Operators of diesel vehicles with a gross vehicle mass of more than 4.5 tonnes are required to meet one of four emissions performance criteria to be entitled to the fuel tax credit. These criteria are designed to ensure that the operators of diesel vehicles have an increased incentive to make sure their vehicle meets the emissions standard set under the National Environment Protection (Diesel Vehicle Emissions) Measure.

Accounting and reporting arrangements for business users under the diesel fuel tax credit scheme will align, as far as possible, with the existing arrangements under the GST law. Generally, this means that a taxpayer will have to be registered for the GST to claim a fuel tax credit; will claim fuel tax credits on the BAS in the same way that they claim GST input tax credits; will apply the same tax periods for fuel tax credits as they would apply for the GST; will attribute fuel tax credits to the same tax period as the GST input credits for the acquisition or importation of fuel; and will be subject to special GST rules applying to the way that their business is organised for the purpose of fuel tax credits. Compliance costs for businesses currently claiming the energy credits through third parties or receiving fuel effectively excise free under the excise remission arrangements will be rebalanced, as the end user of the fuel, rather than the third-party fuel supplier, will claim fuel tax credits directly via the BAS.

The Fuel Tax Bill 2006 provides for the payment of fuel tax credits to taxpayers to remove or reduce the incidence of fuel tax levied on taxable fuels. Under the fuel tax credit scheme, all fuel acquired or manufactured in or imported into Australia for use in off-road applications for business purposes will become tax free over time. In this context, tax-free treatment occurs through a credit of tax paid—that is, the fuel is effectively tax free. This system of taxing and crediting is necessary to deal with the fact that currently fuel tax is paid by the manufacturer or importer of the fuel, generally well before its eventual use. Therefore, under current arrangements, the fuel tax is levied on the assumption that the fuel could be used in a taxable way, and credits are allowed to reverse the effect of the tax when it becomes clear that the fuel will be put to a non-taxable use covered by the legislation.

There are also additional amendments proposed that will allow certain eligible taxpayers to make claims for the early payment of their fuel tax credit entitlements for a two-year transitional period for fuel bought between 1 July 2006 and 30 June 2008. Taxpayers who make claims for early payment will still be required to report their fuel tax entitlements for the relevant tax period on their BAS and to take into account any claims for early payment.

The two-year transitional period will allow taxpayers to align their business practice to the new claiming arrangements and will ameliorate negative cash flow effects that may be associated with claiming fuel tax credits via the BAS. Under fuel tax reform, all the current mechanisms for delivering fuel tax-free treatment for petroleum products will be removed by 30 June 2006, and from 1 July 2006 fuel tax will apply to all petroleum products, including blends of petroleum products suitable for use for internal combustion engines. Effective fuel tax-free treatment for these products, where used other than as a fuel in an internal combustion engine, will be delivered by fuel tax credit to either the user of the fuel or at another point in the supply chain, depending on whether the use is business or private. For the business use of petroleum products as burner fuels or in non-fuel uses, the effective fuel tax-free treatment will be delivered through the fuel tax credit to the business as the end user of the product.

From 1 July 2006, a fuel tax credit will apply to the acquisition or manufacture in, or importation into, Australia of diesel and diesel-like fuels in applications that currently qualify for an off-road credit under the Energy Grants (Credits) Scheme. From 1 July 2008, the acquisition or manufacture in, or importation into, Australia of taxable fuels for use in other off-road applications will become eligible for a 50 per cent fuel tax credit of the fuel tax paid on the fuel. At the same time, the acquisition or manufacture in, or importation into, Australia of petrol will become eligible for a 100 per cent fuel tax credit of the fuel tax paid for all users that were previously eligible for an off-road credit under the Energy Grants (Credits) Scheme. It is intended that alternative fuels such as biodiesel, domestically produced ethanol, liquefied petroleum gas, compressed natural gas and liquefied natural gas begin to incur effective fuel tax from 1 July 2011. From that date, the acquisition, manufacture or importation into Australia of these fuels for use in off-road business applications will become eligible for the fuel tax credit equivalent to the amount of fuel tax paid on the fuel.

Fuel grants will continue to apply from 1 July 2006 to 30 June 2010 under the Energy Grants (Credits) Scheme for the purchase for use of alternative fuels—biodiesel, ethanol, liquefied petroleum gas, liquefied natural gas and compressed natural gas—in registered vehicles with a gross vehicle mass of over 4.5 tonnes. The grant rates applicable in respect of these fuels will be reduced to zero in five equal annual steps commencing on 1 July 2006 and concluding on 1 July 2010.

The proposed amendments in this bill are intended to assist taxpayers to make the transition to the new fuel tax system that will commence on 1 July 2006 to replace the existing complex system of fuel tax concessions. Taxpayers will claim a fuel tax credit through the business activity statement in the same way as they claim goods and services tax input tax credits. The claiming mechanisms proposed are intended to simplify administration and compliance arrangements. I commend the bill to the House.

Kelvin Thomson (Wills, Australian Labor Party, Shadow Minister for Public Accountability and Human Services) Share this | Link to this | Hansard source

I rise to support the amendment put forward by the member for Hunter to the Fuel Tax Bill 2006. The fuel tax legislation provides a single system of fuel tax and associated credits but overlooks the need for nation building and ignores the immediate needs of motorists and middle Australia. The government ought to be taking action to reduce our dependency on foreign oil, it ought to be taking action to take us in the direction of cleaner, more environmentally responsible fuels, and it should be taking action to develop the Australian fuels industry.

With some assistance from the Parliamentary Library, I have put together some data about the Commonwealth revenue from the GST on petrol and excise since the introduction of the GST in 2000. Honourable members might recall that, in the lead-up to the introduction of the GST, the government promised that motorists would not be worse off as a result of its introduction and that petrol taxes would not increase. Although there is no data on GST revenue collected directly from petrol sales, we are able to make reliable estimates based on petrol sales information and average petrol prices. The information which I have available to me comes from the Australian Petroleum Statistics from the Department of Industry, Tourism and Resources, the average retail prices of selected items from the Australian Bureau of Statistics, FUELtrac Pty Ltd, the final budget outcome and Budget Paper No. 1: Budget Strategy and Outlook 2006-07. That collection of statistics shows that excise has remained relatively constant during the period 2000-01 to the present. Back in 2000-01 the Commonwealth take through petrol excise was around $6.8 billion and rose to $7 billion, then to $7.2 billion and then to $7.4 billion. In fact, it has tapered off in the last couple of years and is back to $7.3 billion and $7.2 billion. What has occurred is that the GST take has increased dramatically. In 2001-02, it was $1.4 billion, and it has gone through $1.5 billion, $1.6 billion and $1.8 billion and, for 2005-06, is estimated to be $2.1 billion—that is to say, a 50 per cent increase since 2001-02.

Members might ask: is this increased Commonwealth petrol tax take due to more kilometres being travelled? The answer is no; the excise side is constant, even declining. It may be that motorists may be reducing the amount of kilometres travelled in response to the higher petrol prices they are being required to pay. But in fact we can see that the government has been able to rake in a massive $2.1 billion in GST petrol take estimated for 2005-06—as I said, a 50 per cent increase on that which was occurring back in 2001-02.

We have had the budget night tax giveaway, but the government has not told us what it is collecting in extra petrol taxes, bracket creep, GST and the like. Every time the price of petrol goes up, on the inside the Prime Minister smiles and the Treasurer smirks. On the outside they are wringing their hands and saying, ‘We’re so sorry, there’s nothing we can do,’ but on the inside they are smiling and counting all those extra petrol tax dollars that they are trousering. They can use those dollars either to convince us of what good economic managers they are or for election bribes.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Wills would be aware of what the chair believes about the term ‘bribes’.

Kelvin Thomson (Wills, Australian Labor Party, Shadow Minister for Public Accountability and Human Services) Share this | Link to this | Hansard source

Thank you for your guidance, Mr Deputy Speaker. They should use those dollars to get us off our dependency on imported petrol and onto environmentally responsible, less greenhouse-emitting sustainable fuels such as natural gas and, ultimately, hydrogen. Back in 2001 the government claimed that the GST would not lead to higher petrol taxes. That claim is rubbish. Freezing excise has not worked. The government gets more in additional GST through rising petrol prices than it would have got from the indexation of excise. That promise has turned out to be absolute codswallop—a noncore promise.

Information which I have collected on the period 2000-01 through to 2004-05—for which relevant information is available—shows that the amount of excise forgone has moved from $90 million in 2000-01 up to $1.1 billion in 2004-05. However, at the same time the GST take has been steadily rising, as I indicated to the House previously, from $1.4 billion to $1.5 billion, $1.6 billion and $1.8 billion. So, during the relevant period, all up we get an increase in the petrol tax take of the combined order of over $4½ billion. Of course, this is occurring at a time when motorists are experiencing plenty of petrol price pain. Indeed, I understand that unleaded petrol prices were as high as 143.9c a litre in Sydney today and at a record average of 147.6c a litre in Bega on the New South Wales South Coast. Prices hit a high of 139.9c a litre in Melbourne after peaking at 142.8c a litre on Thursday. This is against a background where the petrol prices in May were said to be at a new record high, with the national average approaching the $1.35 a litre mark. Back in May the Australian Institute of Petroleum reported that $1.35 was the record; it looks as though that will be eclipsed when the latest figures come out.

Given these circumstances, I think it is quite inexcusable that the Howard government has failed to act on Australia’s growing import dependence and its impact on energy security and fuel prices. We are now importing 60 per cent of our oil. For the past seven years, we have been using oil three times faster than we have been finding it. Given this, a do-nothing strategy is not an acceptable option. It sells Australia short and, if it continues, it will seriously damage regional Australia. What can we do about it? One thing we ought to do is to give up some of the foreign policy adventurism which has been so catastrophic and which I have spoken about on a number of occasions. But, with international oil prices so high, the second thing we can do is to increase competition in the Australian petrol retailing industry.

Labor produced a plan to put downward pressure on petrol prices, seeking to break down the power of the big oil companies and help consumers. That plan included amending the Trade Practices Act to guarantee independent wholesalers and retailers access, on fair terms, to fuel supplies from the terminals of the major oil companies; allowing independent wholesalers and retailers to bargain collectively when seeking fuel supplies from the terminals of the major oil companies; outlawing predatory pricing under the Trade Practices Act and strengthening section 46 to stop the abuse of market power, thereby protecting independents against the market power of the big companies; giving the ACCC the power to issue cease and desist orders to provide immediate relief against market abuse and anti-competitive behaviour; granting the courts power to order the divestiture of assets and impose jail terms to tackle cartels and the worst cases of market abuse; and establishing a yellow card system, which would enable the ACCC to keep a register of bona fide complaints of misuse of market power to be used for assessing penalties for proven breaches of the Trade Practices Act.

However, the most important thing we can do to give Australia real energy independence is to use some of our huge gas reserves to produce liquid based transport fuels. We have something like 140 trillion cubic feet of offshore gas reserves that, using current technology, could be transformed into what amounts to a limitless supply of transport fuel, which is well and truly commercially viable and would remain viable even if there were a fall in the oil price. We should be taking advantage of these riches to insure Australia against physical supply shocks and give this nation genuine energy independence. The government ought to be making Australia a place of gas to liquids production. We should neither be sitting on our reserves while the price of our transport fuels continues to skyrocket nor be exporting everything we can find and letting other countries do the value adding, guaranteeing that our current account and trade deficits will continue to rise.

We need to do more to promote biofuels, LPG, CNG and synthetic fuels produced from gas-to-liquids technologies. There is much more that we can do on this front. I commend to the House an issues paper produced recently by the Australian Petroleum Production and Exploration Association. The particular parts of that paper which I find interesting and significant are those which go to the use of gas and using that, in the paper’s own words, as ‘a platform for prosperity’. The paper points out that gas is becoming increasingly important in the global energy mix, that Australia has abundant natural gas resources and that these provide great opportunities for us, as gas is a cleaner and less greenhouse intensive fuel than coal.

The paper notes that, even though significant gas reserves have been discovered, many remain undeveloped. It goes on to say that there is great potential in the development of an Australian gas-to-liquids industry. It also mentions coal to liquids, biodiesel and ethanol as part of a response towards a sustainable fuels policy for this country. It notes that the commercialisation of gas-to-liquids diesel technology is still in its infancy but that it may provide Australia with a viable additional source of hydrocarbon liquids generated from its large gas reserves. The paper indicates to us that the opportunity exists to develop new Australian LNG projects of between 30 million tonnes per annum to 50 million tonnes per annum by the year 2015. The commercialising of gas technologies would enable us to move into the area of electricity generation and also the increased conversion of gas to various forms of liquids. There are, of course, forecast capacity additions to Australia’s alumina refining capacity, and growth in gas fired electricity generation would be very useful given that background.

They do note as constraints that the current fiscal regime is perceived to be more attractive for oil than for gas and they also note as a constraint the fact that the market is very fractured and that you do not have a link between the gas pipeline networks in Western Australia, the Northern Territory and eastern Australia—that is to say, an absence of interconnecting natural gas pipelines between these regions. The lack of interconnections between the Western Australian, Northern Territory and eastern markets results in price differentials and lost opportunities for increased gas utilisation.

Given that problem, the paper does of course refer to the possibility of the establishment of a national pipeline grid at some stage and notes that cross-country pipeline connections have many stakeholders and any final commitment would take years to develop—indeed, is likely to take 10 years from the commencement of feasibility studies to actually switching on the gas supply. Nevertheless, it seems to me that this is precisely the kind of national infrastructure debate we ought to be having. It is a far more productive debate, quite frankly, than the debate about a nuclear reactor which the Prime Minister has established and which seems to me to be simply a debate about dividing Australians and setting us at each other’s throats—more about that than providing the kind of infrastructure which would really give us a sustainable energy policy into the future.

The paper also notes that there could be a role for government in addressing the shortage of skilled labour. It is one of the things that it sees as a problem in the promotion of the upstream oil and gas industry. I agree with that absolutely. I think there is certainly a need for more university and TAFE places to deal with the skills shortage. Finally, it comments on some of the greenhouse issues and makes some remarks concerning an emissions trading regime. I think an emissions trading regime is essential for this country. Indeed, I believe it would prove to be of considerable assistance to the gas industry and would enable them to flourish, which they need to do to meet Australia’s future energy needs.

It is not just the Australian Petroleum Production and Exploration Association which has been at work in developing policies to give Australia a more secure, a more environmentally responsible and a more sustainable energy future but also the opposition. Late last year our leader, Kim Beazley, produced a blueprint concerning the development of Australia’s transport fuel industry. The sorts of policies set out in that blueprint and also referred to by the member for Hunter in his amendment show an opposition keen to take Australia in the right direction of transport fuels. The paper notes that we need to increase the use of Australian transport fuels and reduce our reliance on foreign oil. It notes that we need national leadership to develop existing alternatives like liquid petroleum gas, ethanol and biodiesel and that we need leadership to develop emerging alternatives such as compressed natural gas, liquid fuel from gas and stored electricity as well as future fuels such as hydrogen. Of course, in doing so, we make Australia less vulnerable to future energy shocks, we make Australia less reliant on foreign oil, affecting our trade deficit and our foreign debt, and we make Australian motorists less vulnerable to the slings and arrows of fortunes in the Middle East and in other parts of the world. We also invest in preserving our environment by diversifying our fuel base beyond petrol to biofuels, gas and hydrogen.

When we consider what has happened to the price of petrol and the availability of petrol over the last few years we would have to ask, if we look down the road, if we look down the time tunnel: where is this going? Surely, the prospects in the future are for falling production and higher demand, and in that case prices will soar. The sorts of problems we are experiencing presently will not improve. They are not a one-off, they are not exceptional; they are things which are going to become more serious. In the past three years we have seen global oil prices triple. The era of cheap oil is over.

Given that background, it is quite regrettable that the Minister for Industry, Tourism and Resources has been failing to do the work needed for the government to prepare Australia for the effects of future peaks. My colleague the member for Melbourne, who is in the chamber, asked the minister for industry in June last year about the work that the government was doing to prepare Australia for the effect of future peaks. He asked whether the government had estimated when this might happen, what the decline in global production might be, what the impact on prices might be and whether the government had done any modelling of the impact on the Australian economy. The minister’s answers were no, no, no and no. The industry minister has also said:

At this stage Australia’s fuel security is still good ... Do we need to find more oil? Yes, we do. But short of finding more oil I don’t know what the solution is.

This is simply pathetic. This is a council of despair which Labor rejects. The plans that we have put forward, our transport blueprint, mean that we do have something to offer Australia and its energy future. (Time expired)

Lindsay Tanner (Melbourne, Australian Labor Party, Shadow Minister for Finance) Share this | Link to this | Hansard source

The Fuel Tax Bill 2006 and the Fuel Tax (Consequential and Transitional Provisions) Bill 2006 which are before the parliament tonight are built on a concept that is sound in its underlying terms. The legislation is about rationalising fuel taxation in Australia, partly based on a gradual increase in tax on alternative fuels, which does raise some concerns in my mind about the potential impact on the marketability of the kinds of fuels that we are increasingly going to have to rely on in the future to ensure that transport and energy needs are adequately provided for. It also involves a substantial realignment of the means of taxation of diesel and petrol for off-road business use and the abolition of the Fuel Sales Grants Scheme, which involved a small but significant subsidy to rural and remote petrol consumers.

All off-road business use will now be tax free and this is estimated by the government to cost in the vicinity of $300 million to $400 million per annum. It is interesting, though, that I have not been able to determine whether this includes an estimate of a clawback from company tax, because at the moment the various businesses concerned effectively get a tax offset or a tax deduction for the cost of the fuel tax that they are paying. That will no longer be the case and, therefore, I would assume that there would be a change over time in company tax. As far as I can see, there is no calculation made in the net cost to the taxpayer of these changes, reflecting the inevitability of some clawback in company tax. We do not know whether the estimated cost to the taxpayer from the change is a gross cost or a net cost—in other words, whether the company tax clawback is taken into account.

The loss of the Fuel Sales Grants Scheme is a very significant issue and will have an impact on many consumers in regional and rural Australia, particularly at a time when, as everybody knows, petrol prices have soared and are causing considerable financial pain for many families and many consumers, none more so than in country Australia. It is interesting that effectively the government is extending greater generosity to businesses in rural Australia through the extension of the capacity to get a here-and-now rebate to petrol but, at the same time, is slugging consumers in regional Australia. In other words, people who are its closest political base in regional Australia, particularly farmers and other businesses, will get the benefit but other people—ordinary workers, ordinary consumers—in rural and regional Australia will now lose the benefits of the Fuel Sales Grants Scheme subsidies.

It is true to say that the magnitude of the benefit flowing to ordinary motorists in rural and regional Australia from the Fuel Sales Grants Scheme has been questioned. Some allege that, in many cases, the benefits are not adequately passed through to consumers—they are just absorbed by producers and retailers. I am not really in a position to comment on the extent of that, but certainly it is an issue of some seriousness. It is rather odd that, at a time of very high petrol prices and when a lot of people in country Australia are suffering significant detriment as a result of those petrol prices, the government should choose to remove this scheme and at the same time increase the availability of immediate tax relief to businesses in country Australia.

I am particularly concerned about the prospect of increased rorting of these arrangements. Some time ago I asked the Parliamentary Library to provide me with details of the policing mechanisms for the successor to the Diesel Fuel Rebate Scheme, and the ability of people for off-road use, in effect, to get an immediate rebate of the tax. I found the information provided to me distinctly uninspiring and not reassuring. It certainly appeared to me that the degree of enforcement and rigorous approach to ensuring that only those who were legitimately entitled to claim the rebate were actually able to do so was hardly of the kind of magnitude that you would hope, particularly as there are substantial amounts of money involved. I would suggest that the ability of producers, of people running businesses, to include the private use of fuel within the rebatable or effectively tax-exempt use that is provided for in their productive activity is quite significant. The government is proposing to expand the fuel range that applies to and, therefore, to open up a new prospect of people rorting the system in order to gain a benefit.

I will give an example from my own family background. For many years my father used a Falcon ute as his primary vehicle, which was used largely on his farm but also as his personal vehicle. Because he was also an accountant, he drove the ute around town for a range of other activities. It was a petrol powered car, so it was not covered by what was then the diesel fuel rebate, but under the measures the government is proposing he would have the opportunity to effectively shift the cost that he otherwise would have to pay in tax and excise on his petrol back onto the taxpayer by massaging that into the category of use of a vehicle for business related purposes. Obviously, this is not an unlimited possibility, but there is certainly plenty of scope for people to effectively pad their business related use and minimise their personal use in order to claim the tax benefit. I am concerned that this legislation will actually expand that opportunity and I call on the government to thoroughly examine the extent to which the current enforcement is rigorous and meaningful and to ensure that the tax benefits that flow under both the existing scheme and the expanded arrangements that this legislation provides will apply only to the use for which the benefits are intended.

The bigger picture question, which I do not think this bill adequately deals with, is Australia’s interests in the area of energy in the longer term—in particular, the question of where affordable fuel is going to come from in 10 or 15 years time. This is not just an issue for regional Australia. In fact, it is interesting to note that average spending per household on petrol in this country is broadly very similar in the cities and the country. Although people tend to travel longer distances in country Australia, it is common for people to travel quite long distances commuting to work in the cities, while that occurs to a much lesser extent in many parts of country Australia. So, in aggregate, petrol use per household in metropolitan Australia is broadly very similar to that in country Australia. It is higher in country Australia, but we should not assume that the question of fuel needs is for rural Australia only. The question is also an important one for people in metropolitan areas.

We cannot escape the fact that the days of relatively cheap transport may well be over. Technological change can always deliver miracles—things that nobody could have predicted—and it is eminently possible that, in 10 or 15 years time, different fuels and technologies will enable us to continue to use transport options that, as a proportion of total productive activities, are as efficient and cheap as we have enjoyed for many years. But, Mr Deputy Speaker, you would have to say that that does not look particularly likely. If the effective cost of transport relative to the total economic activity of the nation increases substantially, it will have a profound impact on Australian society and our economy. A whole lot of production dynamics will be changed, and in positive as well as negative ways.

One of the reasons the Australian manufacturing industry is under ever-increasing pressure from imports is that, in the past 20 or 30 years, relative transport costs have plummeted and, therefore, the capacity to economically transport sometimes quite large items or items where the ratio of value to volume is not particularly high has been strong. A lot of those possibilities have been opened up through lower transport costs. If, through events that none of us can control, the relative cost of transport as compared with total production increases substantially, one of the offshoots will be that it will become more economic to produce products closer to the markets in which they are consumed. Also, it may mean, for example, that the importation of primary products from very distant parts of the world become significantly less economic. However, against those kinds of changes there will be a range of things that people will find far less positive. Of course, the overall additional cost that would be borne by consumers would increase and the ordinary living standards of Australian workers and the capacity of businesses to produce affordable goods and services would be significantly affected. It is a very serious issue that we need to pay a lot of attention to.

The shadow minister for human services and government accountability mentioned the question on notice I asked last year of the Minister for Industry, Tourism and Resources about the extent to which the government was seriously planning for the longer term and for the possibility of global oil production reaching a peak and declining thereafter. This is known in the trade as ‘Huppert’s peak’ after the geologist who first coined the idea. There is considerable debate about when that is likely to arise. Some pessimists suggest that we are on the verge of that peak in oil production already and that, after the next year or two, overall oil production will start declining. There are others who are far more optimistic and suspect that it is several decades away. One way or the other, it is going to happen. If we do not gradually reduce our dependence on oil, then when it does happen the implications for Australia and other countries in similar circumstances will be immense.

At that time you will see the interaction of the forces of supply and demand producing very dramatic increases in price. What we have recently experienced in Australia with petrol prices will look pretty trivial compared with the kind of price increases that we may see when we are dealing with a genuinely global market and an increasingly scarce resource attached to ever-mounting demand. It makes sense that a nation like Australia should do everything it can to plan and prepare for that prospect, to diminish our reliance on oil, to develop alternative fuels and to ensure that we are as well placed as possible to ride out any disruption that those changes may bring. Even it is 20 or 30 years away, we still need to be preparing for these things.

A variety of technological possibilities are emerging. Members would all be aware of hybrid cars, the development of hydrogen fuel cells and biofuels. The dynamics of oil may change as a result of things like tar sands, shale oil and so forth. None of them appears to constitute a magic bullet at this stage, but we cannot predict what they will ultimately produce. Barring the kinds of technological miracles that they may or may not entail, we need to prepare for the prospect of a society where the relative cost of transport is significantly higher than currently. This will have enormous implications for things like the design of cities. It will mean, for example, that that which is becoming increasingly common of people commuting from the other side of Geelong to work in Melbourne or from the Central Coast of New South Wales to work in Sydney will be uneconomic; it will be just too expensive. A whole lot of rearrangements of how we go about our lives and the production process will inevitably flow. That is why it is crucial for our nation that we plan now.

The answers that the minister gave to my questions on notice which the member for Wills read out before of no, no, no and no—in other words, ‘We have no idea and we don’t care’—are simply not adequate. In the interests of our nation, in the interests of all the producers of our nation, not least the primary producers, we need to be preparing for these changes and ensuring that Australia is best positioned to ride out any disruption which may flow. We do not know whether this is going to occur, we do not know what magnitude the negative consequences may be, but we have a responsibility to ourselves, to the nation and to our children to prepare for these things, and the government appears to have little interest in them.

There are some short-term things we ought to be doing, such as ensuring the ACCC has greater powers to police the various levels in the oil industry, ensuring that we do not do things like invade Iraq and therefore contribute to the inflation of global oil prices and particularly improving our approach to energy conservation, transport, buildings and a variety of other things. In the long term it is inevitable that our children are going to face a very different world. Instead of pretending that cheap oil is going to continue forever or that it will be replaced by equally cheap alternative fuel sources, we as a nation need to prepare now for the difficulties we will inevitably face, whether they are five or 25 years away.

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for Northern Australia and Indigenous Affairs) Share this | Link to this | Hansard source

I am pleased to speak in this discussion on the Fuel Tax Bill 2006 and cognate bill but with mixed feelings. On the one hand, the legislation is part of a major reform of fuel taxation in Australia and may have a positive effect on regional Australia in streamlining compliance and administration of grants available to reduce costs for transport and eligible off-road activities. Hopefully these reforms will remove the bias in grey areas that have emerged from the current arrangements. On the other hand, I am concerned by the abolition of the Fuel Sales Grant Scheme, which was introduced when it was becoming quite apparent that the introduction of A New Tax System—the GST—on 1 July 2000 was not going to deliver cheaper fuel to regional and remote Australians.

The Fuel Sales Grant Scheme provided registered retailers with grants of 1c per litre in non-metropolitan zones and 2c per litre in so-called remote zones and then an additional grant of 1c per litre where the fuel price is consistently over $1.21. The relief provided by these grants was meant to be passed on to consumers, although it is doubtful that it ever was. I remind the House of this because, in the months prior to the introduction of the GST, there was a very lively debate in the Northern Territory about the impact of a GST on fuel prices. Even former Territorian CLP Senator Grant Tambling was prepared to bet cartons of beer on ABC radio that the GST would deliver not only cheaper fuel but cheaper prices of goods on the supermarket shelves as a flow-on. You and I both know, Mr Deputy Speaker, that that was never an outcome—it did not happen. Even with the Fuel Sales Grant Scheme, Territorians very quickly became used to paying more for fuel and more fuel tax than anyone else in Australia.

We hear volatile discussion at the moment about rising fuel prices and people in the city expressing their dissatisfaction at paying $1.30 or $1.40 per litre. People living in the bush are used to these prices because they have been paying them for some time. Certainly people in my electorate are very used to paying these sorts of prices for fuel. I say to the government that in my constituency fuel prices are a major issue. The member for Melbourne pointed out that people who live in towns adjacent to cities drive longer distances than people who live in regional Australia. That may well be true, but it is also true that people who live a long way away from towns have to travel long distances to service centres to access fundamental services such as medical facilities, schools, legal services and other services which they require for their ongoing lives. In the Northern Territory that means people often travel vast distances on sometimes very poor roads. At the time we were debating the GST and talking about fuel prices and arguing whether or not fuel prices would be higher as a result, people at Ramingining in my electorate were paying $1.30 per litre; today they are paying between $1.55 and $1.60 per litre. If you happen to be living on the Barkly Tablelands, perhaps travelling from Tennant Creek to Mount Isa or Camooweal, if you stop on the highway you would today be paying $1.85 per litre.

You hear the debates in this place and you hear the government say how conscious they are of the people who live in remote communities and in the bush. Frankly I do not think they care, because if they did care they would be doing something about a tax on a tax which, as the prices increase, becomes greater for those people who live in these areas where the price of fuel is so high. Last week while I was travelling around the bush I even heard a story of one place where fuel prices are $2.40 or $2.50 a litre. Of course, travelling becomes completely uneconomical. People who have low discretionary incomes, as many people who live in the bush do—as you would know, Mr Deputy Speaker Causley, coming from the land as you do—do not have the dough to throw away on paying huge costs extra for fuel. They already pay huge costs because of where they live.

If you live in a remote Aboriginal community in the Northern Territory it is more than likely you are probably earning somewhere around $200 to $240 a week; you might have an annual income of $10,000 to $12,000 a year. If you are lucky you might have a vehicle. Can you imagine travelling the distances that these people are required to travel and paying $1.80 or $2.00 a litre for fuel, and travelling on poorly maintained roads because this federal government have perennially failed to provide appropriate money for the infrastructure? We have had debates in this place about the Roads to Recovery program. I have been up in the scrapers here many times, talking about the failure of the government to recognise their responsibilities for providing funding for roads on land in the Northern Territory which is not in local government areas. We are talking of 9,000 kilometres or thereabouts of dirt roads.

Because you have traversed this part of the country, Mr Deputy Speaker Causley, you would know that many of these roads are economically very important. They carry the tens of thousands of head of cattle that traverse the Darwin wharf on a regular basis at this time of year, heading for markets in South-East Asia. The fuel cost is borne ultimately by consumers, wherever they might be. Producers of cattle in the Northern Territory, indeed across the Top End of Australia, because a large amount of the beef that is exported across the Darwin wharf comes from western Queensland, pay for it. Either they have to absorb the additional cost within their pricing or they pass it on to someone else, and we know that that has an outcome on supermarket shelves either here or overseas.

Also because of the failure of this government to provide the adequate resources to maintain the roads in the region, people are required to drive extraordinarily long distance to get their cattle to market. I know of a property owner on the Plenty Highway who was selling into the markets in Queensland. Normally, you would expect to be able to drive across the Plenty Highway towards Winton and to take the product to market at Rockhampton or wherever the saleyards are. Do you know what these people have to do? They have to drive down to the Stuart Highway—that is, they have to drive west not east—then drive north to the junction of the Stuart Highway and the Barkly Highway, then drive across to Mount Isa and then drive down to the saleyards. That creates an enormous burden upon them, and it adds substantially to their costs. The other costs that arise are those which transport companies bear in maintaining their road trains. Maintenance work increases extraordinarily as a result of having to traverse these roads.

I have mentioned Mount Isa but at Alpurrurulam, a community of 300 on the Queensland-Northern Territory border, a community operated bowser currently is selling fuel at $1.70 a litre. That is cheaper than on the highway because the community is not that far from the homestead on the Barkly Highway, which I have already quoted as having fuel at $1.85 a litre, and it does it at cost. There is no profit in it; they just do it at cost to service their community and because they are aware of the low levels of income of members of their communities. At Borroloola, in the Gulf, fuel is currently selling at $1.65 a litre. At Ampilatwatja store, 300 kilometres north-east of Alice Springs along the unsealed Sandover Highway, a road that is similar to the Plenty Highway and which comes off the Plenty Highway, you will pay $1.68 for a litre of unleaded fuel, and diesel will cost $1.78.

As I have said previously, when people discuss regional Australia generally in this place they are not referring to the part of Australia that I live in. They are not referring to Northern Australia. They are certainly not referring to the Northern Territory or to the Kimberley, and I know you have had experience in the Kimberley, Mr Deputy Speaker. They are not referring to Far North Queensland, or western Queensland or Cape York. What they think is regional is Moss Vale. They have no idea. They think that if you put on a pair of riding boots and get into your Land Rover and drive over the top of the Great Dividing Range you have hit the bush. They have no idea at all. They might be dealing with Gippsland—of course, we know about Gippsland and the National Party’s representative in here from that area. They might be referring to the Mallee and or even to the south-west of Western Australia, which is beautiful country and which might be classed as regional, but it is absolutely nothing like the North. When they have a picture in their minds of regional Australia, that is what they see. They have, in my view, little experience, knowledge, understanding or comprehension of the part of Australia that I am talking about, the part of Australia that I am privileged to represent in this parliament.

When I discuss regional Australia in the Northern Territory, I am talking about a relatively small number of pastoral holdings, something in excess of 250 across the Northern Territory; a number of mine sites scattered around the Northern Territory producing enormous wealth for this nation, whether it is at Nhulunbuy with Alcan or the producing of gold in the Tanami or manganese on Groote Eylandt; and a large number of discrete Indigenous communities scattered around the Northern Territory—some hundreds of them. When I sit here in this place and listen to the government dealing with issues such as fuel tax they are talking about farmers. They do not talk about the large number of small communities scattered around the vast areas of the north, not only in the Territory but elsewhere such as in the electorates of the member for Leichhardt, the member for Grey, the member for Kalgoorlie or the member for Kennedy. Australians living in those electorates, like Australians living in my electorate, have been savaged by the burden of the GST. They pay more fuel tax—and the cost of fuel of course is relatively higher in any event. Whatever merits there might be for the GST, I have always argued that Australians living in remote Australia pay more GST. The fuel sales grant was implemented to ease that burden. The scheme was not indexed, so as the price of fuel has increased since July 2000 the relative relief provided by the scheme has become less and less. When you are paying the prices I quoted earlier for fuel at different locations, the grant of 3c per litre for 2006 is not worth much. Consumers have had to absorb the increase in fuel price, including the tax component—and, as I say, I am not even certain that the benefit was ever really passed on to the consumers.

Other failures of the scheme, such as boundary anomalies and whether the full extent of the grant was being passed on to consumers, mean very little when you are paying 20c or 30c more for each litre of fuel. I have always argued that the Fuel Sales Grants Scheme would not compensate for the impact of the GST in rural and remote communities. In fact, the fuel taxation inquiry found it difficult to identify the benefits to consumers in rural and remote areas. They said the scheme had to be abolished. The money saved by its abolition—$270 million in 2005-2006—is to be channelled into road funding. It will be very interesting to see if we get any more road funding in the Northern Territory. A significant amount is required to address the road needs that I identified earlier and that are commonly understood by people who drive in the Territory and live and work in these remote places.

It is worth while pointing out how fuel prices might impact on communities and the relative cost of living in different places across Australia. As it happens, since 1998 the Northern Territory government’s Department of Health and Community Services has done a regular survey of the cost of household food baskets in rural and remote areas as part of its nutrition and physical activity program. It is called the market basket survey of remote community stores. Recall that I said that on the Barkly motorists are currently paying $1.85 a litre for fuel. I also mentioned a figure for Borroloola. We know that, if you live on the Barkly in that remote part of the Northern Territory, you will pay 153 per cent more for a food basket than you would pay in Darwin. What does that tell you? It tells you not to have a lot of money in your pocket. It tells you that the additional cost of paying for fuel at the price which is currently being asked for in the bush means that you have even less money in your pocket.

I know there has been a lot of discussion about alternative fuels. I heard the member for Melbourne talk about how we need to adjust our minds to the idea of higher relative costs for transport. That may well be true, but if we want people to thrive in remote Australia we have to find a way to provide them with fuel at a reasonable cost, not unreasonably different from that which their city cousins pay in Sydney or Melbourne. I have some personal views about this which I have expressed at meetings I have had with some of my colleagues. They do not all agree with me—not even my mate sitting next to me, the member for Hunter. We have conversations about this, but I have a view which he does not share. He comes from a little place called the Hunter Valley.

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Link to this | Hansard source

I am from the bush too, mate.

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for Northern Australia and Indigenous Affairs) Share this | Link to this | Hansard source

That ain’t regional; that is very local.

Greg Hunt (Flinders, Liberal Party, Parliamentary Secretary to the Minister for the Environment and Heritage) Share this | Link to this | Hansard source

I don’t think he likes you!

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for Northern Australia and Indigenous Affairs) Share this | Link to this | Hansard source

I like him. I think he is a terrific bloke. He just has some strange ideas.

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Link to this | Hansard source

Mr Fitzgibbon interjecting

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for Northern Australia and Indigenous Affairs) Share this | Link to this | Hansard source

It did. It made me run playing soccer. But what we have to understand is that the changes governments make to the way they price commodities through the tax system can have a dramatic impact upon people’s lives. Whilst it is all very well to talk about trying to introduce cheaper fuels, the fact of the matter is that fuels are not cheap at the moment and they are not likely to get any cheaper and we have to find a mechanism by which people who live in remote parts of Australia are adequately compensated for the extra costs they wear as a result of living where they do.

Presumably, this country wants people to live in the bush. Presumably, this country wants people to inhabit those areas of Australia which produce the wealth of this nation. I am hopeful that when we move on in these debates we will see that not only do we produce the most wealth but also we produce a hell of a lot of the tax income for government. We want to see some of it returned to where it belongs. We want government to return a lot more of it than it currently does to people in the bush—the people I referred to earlier. My friend is from the Hunter where they have a lot of coalmines, they produce a lot of money and they export a lot of coal to Japan and elsewhere. That is terrific, but the people who live in that community do not bear anywhere near the same costs of living as people who live in remote parts of the Northern Territory. I am pleased to have made this short contribution and I look forward to having another chat about it at some later stage.

Paul Neville (Hinkler, National Party) Share this | Link to this | Hansard source

The Fuel Tax (Consequential and Transitional Provisions) Bill 2006 introduces a single system of tax fuel credits for Australian business from 1 July and will phase in extensions to eligibility between then and 1 July 2012. This legislation provides for the removal or reduction of the amount of excise levied on taxable fuels and, when fully implemented, means that fuel tax will only effectively be applied to private use of fuel on-road in motor vehicles and in certain off-road applications; business use of fuel on-road in vehicles with a gross vehicle mass of more than 4.5 tonnes or less; and business use of fuel on-road in vehicles with a gross vehicle mass of more than 4.5 tonnes, but only to the extent of the applicable road user charge.

Before I go into the substance of my contribution, I want to say a few things to the member for Lingiari in his absence. I share his great concern, as I think every rural member does, that in remote areas all over Australia—whether it is an area in Western Australia, in the Northern Territory or in the south-western corner of my electorate—the price of fuel is very expensive. There is no denying that. But I do not think it is fair to suddenly drag out the GST as a major component of that. The reason—and this is often conveniently forgotten by our critics and, dare I say, by the opposition—is that, at the time of the introduction of the GST, we effectively reduced the excise by 7c a litre.

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Link to this | Hansard source

Strike rate 77c, mate.

Paul Neville (Hinkler, National Party) Share this | Link to this | Hansard source

Yes, 77c. The 7c reduction in excise was to offset the GST. From that point onwards, the cost was neutral. The GST component that has been added to fuel has come from the 77c to where it is now times 10 per cent—not from zero, which is the scam that is used in a lot of arguments around the place. The other thing is that the government pegged excise at 38.14c a litre. Had we continued, as the previous government had, indexing that every six months, we would be paying another 14c a litre more than is currently the case. That, again, is conveniently forgotten by our critics.

If you also look at the international prices of fuel, you will see that Australia is almost always in the bottom four. They are usually the United States, Canada, Mexico, Australia and, occasionally, New Zealand. We are generally third or fourth in the world with the cheapest fuel, and our government charges are not excessive by international standards. If we want to have a mature debate about this, let us take those things into account as well.

If you want to take a more positive view of where the government is going with a whole range of vehicles, look at the purpose of the bill. I have not heard many speakers on either side drilling down to the positive effect it will have. Two years ago, the Prime Minister released a white paper on energy policy entitled Securing Australia’s Energy Future. The paper outlined a major program of reform to modernise and simplify Australia’s fuel system. It was centred around a single fuel tax credit system to replace the current complex system of fuel tax concessions.

While the move was widely welcomed by primary industry and trucking sectors, a number of concerns were raised in relation to businesses having to claim the fuel tax rebates through their quarterly BAS statements. Many of these businesses have approached their local MPs, including me, in recent months to let us know about the cash flow challenges of this and what they will face if they have to wait up to three months for their 38c a litre rebate. You might say, ‘That’s probably not all that big a deal,’ but I have a fisherman in my area whose fuel bill is $90,000 a month. That is a very big fuel bill. The cash flow implications to him are quite substantial. Bear in mind, too, the precarious nature of fishing in some of Australia’s offshore fisheries—in particular the east coast trawl area, most of which falls within the Great Barrier Reef Marine Park. The problems there are manifest, and we are still working through compensation packages and the like. Banks that are allowing fishermen to continue are providing them with very meagre overdraft facilities, right down to the point of their monthly fuel bill. When you have to add another 38c a litre to that fuel bill, albeit that you will get it back in one to three months time, it is still a substantial cash flow problem.

I was contacted by a number of operators who were looking for the high out-of-pocket costs. As I said, this involves tens of thousands of dollars or, in one case I know of, $90,000. I would like to quote a few of the comments that I have received from a number of businesspeople and fishermen in my electorate. One of them said:

We have gone from paying 22 cents a litre (with rebate off) before the GST came in, to now paying almost $1.10 plus GST (with the rebate off) to the Government wanting us to pay the full price of $1.48 or more—as you know, prices keep increasing, that is just today’s price. Our fuel bill alone is in the red by $35,000 just since December.

I make the point: cash flow is important. Another said:

This would put a lot of trawler businesses under terrible strain financially ... if this new system of administration were to be introduced, trawler and fishing businesses could not afford to fuel their boats and wait to claim the rebate back in their BAS. Many family operators would just close down.

A third one states:

This and the fuel cost at the moment will surely bankrupt my business as we are finding it extremely hard. I have recently retrenched my deckhand and am back on the vessel myself with my son to try and make ends meet.

You can gather from those statements that this has had a more profound effect on the fishing industry than anyone else. And I make no apologies for saying this: I am a critic of the Great Barrier Reef Marine Park Authority. My colleagues in the coalition know of my ambivalence with this organisation. I think the Representative Areas Program on the Great Barrier Reef was a disgrace. The sooner it is reviewed and certain areas opened, the better. You have to remember that at the turn of the decade these people went through what was called the east coast trawl plan. It removed 250 of the 750 trawlers on the east coast of Queensland. Since then, another 50 or more have gone. We were told at the end of that process, ‘The reef is now secure; it is now sustainable. We may need a little bit extra in the marine park, but that won’t be a problem.’ How much extra? Initially, it was going to be 20 per cent but, when the maps came out, it was 33 per cent. Worse still, when the maps were put over traditional fishing grounds, the effect was around 70 per cent to 75 per cent.

This brings me back to the point of the debate: what were the effects of that? One was that you could not fish in what was remaining of the traditional areas without the risk of pulse fishing, where you just outfish an area. I have often wondered whether the technique at the beginning of this plan was for the fishers to be able to come back to the government and say, ‘We’re overfishing what’s left of the reef.’ I am a cynic enough to believe that that was probably part of the agenda. Nevertheless, I have some very positive fishermen in my area who decided they would go to the outer reef. To go to the outer reef, they had to upgrade vessels, buy new vessels and new equipment but—and this also applies to some who are still fishing within the marine park area—there are vastly greater distances to be covered at a time when fuel is at a premium.

So you can see that these taxation measures and how they are implemented are terribly important, especially to someone whose banker has them on a very tight overdraft. The statements that I read to you before came from commercial fishermen who have been hard hit by this Great Barrier Reef Marine Park zoning whereby, in many instances, trawlers travel great distances.

The government has recognised the risk to these businesses, businesses which have been the backbone of many regional economies—and, I say quite unequivocally, to the agricultural life and fishing life of Gladstone and Bundaberg. We have proposed a compromise by way of a two-year phase-in of the BAS-claiming system. These amendments will be debated in upcoming legislation. Without anticipating that legislation, I understand that the changes will mean that eligible businesses, including farmers, fishers and truck drivers, will be able to elect to make a claim for early payment of fuel tax credits on a written form, as they do now, until 1 July 2008. They will still have to pay the excise up front but, by filling out this form at the time of purchasing their fuel, they will be able to claim back the rebate within a fortnight. That is significant if you are a three-monthly BAS payer. Businesses have until 31 December this year, as I understand it, to elect to take up this early payment option. I would certainly encourage all affected fishermen and businesses in my electorate to do so.

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Link to this | Hansard source

What about after two years? What do they do then?

Paul Neville (Hinkler, National Party) Share this | Link to this | Hansard source

That is a good question. It is anticipated that having that time to phase in this system and having the effects of the Great Barrier Reef Marine Park RAP ameliorated, ensuring the fishermen get their compensation package and their adjusted vessels back into new fisheries and the like, they will have two years to prepare for this and make cash flow arrangements. So it was a good question and I am happy to answer it.

While I was in favour of the continuation of the existing system for fishermen because of this unique situation, I welcome the measure and thank the government for at least taking on board the concerns of commercial fishermen, farmers and owner-operators of other primary production areas who signal their concern about changing to the BAS system with regard to their tax. Businesses will need to report their fuel tax credit entitlements for the relevant tax period on the BAS but, in the meantime, during the phase-in period the impact will be minimised and they will have some financial room to move.

While not the ideal solution, I consider it a fair solution to a problem facing many of our primary producers. When you consider this in combination with the wider arc of this legislation, when fully implemented it will wipe $1.5 billion off the fuel bills of off-road users over the next six years and that will be significant to those sorts of people. When the legislation comes into full effect, fuel tax will be effectively applied only to fuel used in private vehicles and for certain private purposes and to fuel used on road in light vehicles for business purposes. In fact, it is estimated that the number of businesses and individuals eligible to claim fuel tax relief will rise from around $185,000 to $1.2 million. The point I make is that there have been some tough measures in this legislation and they have not all been what I would like for my people. But, if you take the totality of this package, quite apart from having—

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

It’s rubbish!

Paul Neville (Hinkler, National Party) Share this | Link to this | Hansard source

It is not rubbish. This is well-negotiated and important stuff, Tony, and you know it. The current tax system applies only to diesel fuel used off-road in specified and narrowly defined primary production areas and on-road in heavy diesel vehicles. In fact, I think it would be fair to say that, up until the election of this government in 1996, it was unimaginable that one day all fuel used off-road in farming businesses would become tax free, including petrol used in farm vehicles and equipment which is currently not eligible for credit. That will all change with this legislation, which clearly indicates the government’s intention that, over time, all off-road business users of all fuels will be eligible for fuel tax credit.

From 1 July 2006 all fuels used on-road in heavy vehicles will be eligible for a partial credit. This will be of particular benefit to farming businesses, quite simply because most of the estimated 54,000 heavy petrol vehicles are located in regional and rural Australia. So that will be significant to your people too, Tony.

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Link to this | Hansard source

How many?

Paul Neville (Hinkler, National Party) Share this | Link to this | Hansard source

Fifty-four thousand hea-vy petrol vehicles. From 1 July 2008 that partial credit will be expanded to a full credit for petrol users in eligible primary production areas. Also from 1 July 2008, a 50 per cent credit will apply to all currently ineligible activities, and this will rise to a full credit in 2012. This means that by the time the changes are fully in place, by 1 July 2012, fuel tax will effectively apply only to the private use of fuel in private vehicles and certain off-road uses, the business use of fuel on-road in light vehicles and the business use of fuel in heavy vehicles to the extent of the applicable road user charge.

Extending these rebates will in a practical sense mean that farmers will no longer have to be burdened by paperwork associated with keeping track of how much fuel they use in a range of eligible and ineligible activities. It will see an increase in their credits and a reduction in their office work. So, as well as significantly reducing this record keeping and compliance cost for business, these measures will simplify and reduce the amount of interaction between farmers and other primary producers and the Australian tax office, and I find that one of the great burdens for farmers and other primary producers is the amount of paperwork associated with running a rural or a maritime business. They come off their trawlers or off their tractors dog tired at God only knows what hour of the night and then have to sit down to paperwork. To increase their credits and reduce their paperwork to the extent that we can I think is a good thing. I thank the government for its assistance to our trawler operators along the east coast and I commend this bill to the House.

Kelly Hoare (Charlton, Australian Labor Party) Share this | Link to this | Hansard source

I rise tonight to speak on the Fuel Tax Bill 2006 and cognate bill. The purpose of this legislation is to implement a system of credits to offset partially or fully the excise that some taxpayers pay on fuels and to lay the groundwork for extending the tax net to alternative fuels. All of us come to debates in this place with different approaches, and I understand that the members who have spoken so far on the Fuel Tax Bill have done so for a variety of reasons. We just heard the member for Hinkler talk about his constituents and the industries in his electorate. I heard the member for Lingiari talking earlier about the effect that fuel prices have on people who live in the remote parts of this country. I usually come to these debates with either an interest in the particular subject or a concern about how the legislation will have an effect on my constituents, and in this case I have come to it with both of those.

When I saw the Fuel Tax Bill 2006 and the Fuel Tax (Consequential and Transitional Provisions) Bill 2006 listed for debate, I thought that this would be the perfect opportunity to talk about the rising cost of fuel and how that affects my constituents. But as you know, Mr Deputy Speaker, as we research legislation sometimes it can be revealed how complex the issues are, and that is what I have found with this legislation—how complex the current system is and how complex it is still going to be even though it will be simplified a bit. It just emphasises the whole gamut of issues that the legislation addresses and how governments and oppositions need to be on top of that. To that end, I thank the member for Hunter for his assistance in providing all the information that is required for this particular legislation and talking us through the various complexities.

The bill constitutes major reform of fuel tax in Australia. It will provide for a single system of fuel tax with associated credits; reductions in the incidence of fuel tax levied on taxable fuels; a staged introduction of a framework for the taxation of liquefied petroleum gas, liquefied natural gas and compressed natural gas from 1 July 2011; a staged reduction in tax assistance for biodiesel and domestic ethanol; and the linking of fuel credits to environmental standards. Most of these are welcomed by the opposition.

The government actually released a white paper on this issue, back in 2004, which planned to have this new system in place by 1 July 2006. On 29 March this year, two years after the government’s white paper was produced, the government finally introduced the Fuel Tax Bill, to be implemented on 1 July 2006. So somebody has been going through the shelves of the Minister for Industry, Tourism and Resources, come across this white paper, had a look at it and thought: ‘In 2004 we made a promise that we were going to introduce these changes by 1 July 2006. It’s nearly that time so we’d better get a move on.’ Even so, we have seen the government circulating, two hours prior to this debate starting today, more amendments to this legislation. I said that the member for Hunter was on top of this legislation. It is very concerning to see that the government is not.

The current arrangements for the taxation of fuel are highly complex and there has been scope for rationalisation. The taxation of petrol is based on a non-indexed excise. This bill does not change the taxation of petrol for basic household motor vehicle use, which a lot of my constituents would be very concerned to hear. There is currently a grant available for diesel fuel under the Energy Grants (Credits) Scheme. There is an on-road credit, which includes alternative fuels, for vehicles over 20 tonnes, for vehicles between 4½ and 20 tonnes and for vehicles operating outside or across metropolitan boundaries. There are off-road credits which apply to business usage. There is a fuel sales grant, under the Fuel Sales Grants Act, of 1c to 3c per litre of gasoline or diesel fuel in non-metropolitan areas. There are remission certificates which apply to exempt commercial users, in industries like plastics and chemicals, from excise or customs duty on certain fuels. This legislation seeks to consolidate these measures into a single fuel tax regime with credits achieved through the BAS reporting system. Many users will effectively receive the same level of tax, albeit under different administration arrangements, but some users will face significant tax reductions and there will be higher tax for some on-road use. Aviation fuels are excluded from this fuel tax credits system.

The member for Hunter has moved an amendment which covers seven points that the opposition is concerned about. Of those seven points, the third point addresses some of the points that I would like to make now. The legislation that is before us does not do anything to reduce Australia’s dependence on foreign oil. The amendment:

... 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 hydrogen as Labor has committed to in its Fuels Blueprint;

That fuels blueprint was released on 19 October last year by Kim Beazley, the next Prime Minister of this country. Labor’s third blueprint is titled Developing the Australian fuel industry. As Kim Beazley pointed out:

We need national leadership to develop:

• existing alternatives like liquid petroleum gas, ethanol and biodiesel;
• emerging alternatives such as compressed natural gas, liquid fuel from gas and stored electricity; and
• future fuels, such as hydrogen.

A Beazley Labor government would re-examine the depreciation regime for gas production infrastructure and allow the selective use of flow-through share schemes for smaller operators. A Beazley Labor government would make alternative fuel vehicles tariff free, cutting up to $2,000 off the price of current hybrid cars; work with state and local government to give city traffic and parking advantages for these vehicles; and examine the granting of tax rebates for converting petrol cars to LPG. A Beazley Labor government would also conduct a feasibility study into a gas-to-liquids fuels plant in Australia, offer petroleum resources rent tax incentives for developers of gas fields which provide resources for gas-to-liquid fuels projects, examine a new infrastructure investment allowance for investment in Australian gas-to-liquid fuels infrastructure, develop a targeted funding scheme for research and development in this area, and work with industry to improve engine design and fuel quality standards.

There is a huge opportunity for Australia arising from the biofuels and alternative fuels debate. We do have too much reliance on overseas oil, which is then reflected in the hefty prices that the mums and dads and grandmas and granddads of this country pay at the bowser every time they fill up their car’s tank with petrol. However, this government has not embraced this opportunity, so this issue will be on the minds of all Australians at the next election. People are sick and tired of paying up to $1.50 a litre—and that is in my region, let alone regions in remote Australia—for petrol, which will probably go up to close to $2 before the next election. While they are paying that price for petrol, they are losing money from other areas of their family’s budget such as children’s sporting activities and airconditioning for the home. Different family activities might have to go by the wayside because parents have to pay more to put petrol in their car to undertake day-to-day living. So I think a Beazley Labor government’s approach to biofuels and alternative fuels will be supported by the Australian public.

On the question of fuel prices: we have just come out of the long weekend holiday, when many Australian families take to the road to make the most of a three-day long weekend. As we see most times coming up to public holidays—Easter, school holidays, the long weekend in June—we saw the fuel prices soar. We have been encouraging the government to give the ACCC more powers to monitor fuel prices, to make hard decisions on the spikes in fuel prices and to punish those oil companies or petrol station owners who take advantage of these particular vulnerabilities in our community. On the World Today on Friday, 9 June, Brendan Trembath was interviewing Lachlan McIntosh, who is the Executive Director of the Australian Automobile Association. Lachlan said:

Well, we saw a big spike in the Eastern states yesterday, up10 or 12 cents a litre—

That is 10c or 12c a litre in one day. He said:

We didn’t see the same rise in Perth. Perth doesn’t have a long weekend coming, so their prices are 10 or 12 cents a litre cheaper. I hope as a result of our analysis that doesn’t drive the price in Perth up, but it is sort of pretty annoying.

The newspapers were full of similar stories. An article in the Brisbane Sunday Mail on 11 June talked about the price peaking at $1.35 for a litre of unleaded petrol:

The surge prompted fresh calls for a thorough inquiry into the fuel industry with both the RACQ and the Queensland Consumers’ Association demanding a vigorous probe by the Australian Competition and Consumer Commission ...

The RACQ’s Ken Willett said:

... motorists were being charged six cents a litre more than was justified by movements in the international price of oil.

Going from one end of the country to the other, the editorial in the Herald Sun, titled ‘Pumped dry’, said:

... service station owners say that some people are trying to swap mobile phones and wrist watches for fuel.

That is a disgraceful situation that we are in, that families cannot afford to put petrol in their cars and are going to trade off things that they now take for granted, whether it be their wristwatches or their mobile phones.

In response to this the member for Hunter, our shadow Assistant Treasurer, put out a statement about John Howard’s refusal to grant the ACCC the powers it needs to scrutinise petrol prices, saying that the Prime Minister does not treat the concerns of motorists seriously. In 1997 the Trade Practices Act was amended to remove the power of the ACCC to continually monitor petrol prices. The Prime Minister cannot just say to the ACCC: ‘Have a casual look at it over the weekend. Let me know if you find anything untoward.’ The ACCC does not actually have the powers to be able to do anything about that. As the member for Hunter stated, the Treasurer should be writing to Graeme Samuel of the ACCC to demand that they ‘begin thorough monitoring of petrol prices as provided for under Part VIIA s95G(6) of the Trade Practices Act’. The Prime Minister and the Treasurer will not do this. The Australian public keeps getting slugged at the bowser because of this. This legislation goes no way to addressing any of these problems.

Labor supports the basic structure of this bill as a more sustainable basis for fuel taxation in Australia. In particular, Labor supports a revised timetable for excise rises for alternative fuels. This was a concession for these emerging industries that was won after significant pressure from Labor. However, there were aspects of the bill that appeared to be problematic. One of those in particular was in relation to claiming the rebate either quarterly or yearly, as some businesses would, because that is when they currently put in their business activity statements. Labor will continue to work with affected sectors and will continue to seek some relief from these provisions. We will continue to try and work so that these provisions do not adversely affect the industry sectors in the years to come, as these regimes are being phased in.

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

I put out a press release in my electorate last week saying that this was possibly the worst piece of legislation that I had seen in 15 years of politics. I will elaborate on that in a moment. One of the things the Fuel Tax Bill 2006 and cognate bill do, particularly at this time in our history, is send so many mixed messages to a number of industries, and particularly fuel users generally, as to the future of renewable energies. There is also the principle of taxing energy as a source of revenue. Before elaborating on that particular issue I would like to read to the chamber—and I am delighted to see so many in the gallery to listen to this speech—an article from the Chicago Tribune of 19 May 2006: ‘Big 3 big on ethanol expansion’.

Bernie Ripoll (Oxley, Australian Labor Party, Shadow Parliamentary Secretary for Industry, Infrastructure and Industrial Relations) Share this | Link to this | Hansard source

There’s so much noise, we can’t hear you; you’ll have to speak up!

Tony Windsor (New England, Independent) Share this | Link to 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)

Bernie Ripoll (Oxley, Australian Labor Party, Shadow Parliamentary Secretary for Industry, Infrastructure and Industrial Relations) Share this | Link to this | Hansard source

Like the member for New England, I too am amazed at the number of the people in the gallery tonight. I am always appreciative of that, so I thank him for pointing that out to us. I rise to speak on the Fuel Tax (Consequential and Transitional Provisions) Bill 2006. I think this is a very important bill. It is important not only because of the issues it raises but also because of what it does not do and what the government has not done to properly deal with fuel and the fuel industry more broadly. That said, I broadly support the intent of this bill but I also support the second reading amendment moved by the member for Hunter as the correct way forward on this critical issue. The government, as in so many other important areas of public policy, has been slow to respond to issues which affect the daily lives of so many people, in particular the price of fuel. It has also been slow to respond to the challenges facing this nation with regard to the fuels industry. I will address these issues in this debate and will deal with the bill more directly.

This bill amends several acts in order to implement the Fuel Tax Credits Scheme. It continues a major change of the fuel taxation system in Australia, which other speakers have pointed out. I also make the point in my contribution that the current arrangements for fuel taxation in this country are exceptionally complex and difficult to work with. The explanatory memorandum states:

These Bills provide a single system of fuel tax credits to remove or reduce the incidence of fuel tax levied on taxable fuels, and a framework for the taxation of gaseous fuels from 1 July 2011, when fuel tax is levied on liquefied petroleum gas, liquefied natural gas and compressed natural gas for the first time.

The fuel tax credits system effectively means that all taxable fuel acquired, manufactured or imported for use in off-road applications for business purposes will become tax free over time. Under the fuel tax credits system, fuel tax relief will be expanded for fuel used in road transport. The amendments should generally simplify the administration of the existing system of grants for fuel use. The move to apply the administrative rules that apply to other indirect tax laws to the proposed Fuel Tax Credits Scheme should also assist with administration. As I said, this is a move in the right direction but leaves unattended some of the more critical issues of the cost of fuel for ordinary people and a number of other critical issues involved in this matter.

Labor has long supported the basic reform program. In fact, Labor has led this debate and has advocated reform in the oil and fuels industry for some time. Labor has been instrumental in providing a longer phase-in for the introduction of fuel tax for liquefied petroleum gas, liquefied natural gas and compressed natural gas to assist the development of these industries. Labor also supports the requirement for environmental requirements to be met by major fuel users as part of the fuel taxation regime. The second reading amendment of the shadow minister, the member for Hunter, states:

That all words after “That” be omitted with a view to substituting the following words:“whilst not declining to give the bill a second reading, the House:

(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;

(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;

(4)

condemns the Government for ignoring the impact of rising petrol prices on Australian families;

(5)

condemns the Government for increasing petrol prices in regional Australia through the abolition of the Fuel Sales Grants Scheme at a time of very high petrol prices;

(6)

condemns the Government for failing to strengthen the Trade Practices Act to protect competition in the petroleum industry; and

(7)

condemns the Government for failing to guarantee that the money saved as a result of the abolition of the Fuel Sales Grants Scheme will not be specifically directed to roads in regional, rural and remote Australia”.

These are all sensible things that the government should be doing of its own volition; they are not things that the opposition should have to thrust upon the government.

In discussing the detail of this bill, there is an opportunity for me to range over a number of areas, including some of Labor’s initiatives in the fuel industry. Firstly, I would like to point out that Labor understands that government does have a significant role to play in helping to ease the pain for Australian families at the petrol bowser. This is no longer a simple issue of cost; it has become a critical issue in families’ budgets and how they plan to spend their weekly, fortnightly or monthly pay packets.

Labor and the Leader of the Opposition, Kim Beazley, put the Prime Minister on notice over petrol prices last June. Labor has put forward a plan specifically to tackle this issue, but before I go into what our plan includes, I make the point that something positive, something concrete, something definite can be done. If the government claims, as it often does, that it does not control the levers of the price of petrol and that it is a global market—it talks about price parity and a whole range of things—I would say to the government: ‘You are just not trying hard enough. You just do not care enough; you are not willing enough; you are not doing enough.’ There is something that can be done. There are a range of measures that can be brought forward. Labor’s plan includes, in particular, applying the competition blowtorch to the industry by strengthening the Trade Practices Act to prevent abuse of market power. The pricing issues and the abuse that takes place in the fuels industry are significant. You do not need to be an expert in this matter to understand it. Most, if not all, consumers understand what happens at the bowser in profiteering and pricing issues.

The second thing that the government could be doing and that Labor plans to do is to have the Australian Competition and Consumer Commission, ACCC, investigate petrol prices and report every six months on price movements—particularly in regional Australia, in areas where there is significant movement and significant cost to so many people in the bush. Thirdly, Labor would modernise the 25-year-old regulatory regime for the petrol fuel sector, to promote competition and protect independent service station operators and franchisees. This is something that I am particularly concerned about and interested in. If the government continues to talk about competition as the great driver of downward pressure on prices, then it should promote fair competition, and it should do it through a fair, modernised regulatory regime—something that can actually have some impact.

I will take this opportunity to mention something that the member for New England mentioned and which I am sure others will as well. I refer to the comments made by Senator Barnaby Joyce, who has been quoted as warning ‘the Petroleum Retail Legislation Repeal Bill 2006, which introduces a new regulatory scheme for petrol, will drive independent service station owners out of business’. I do not think that is healthy for the country; in fact, I do not think that is very healthy for the fuels sector or for service stations in this country. More importantly, I do not think it is very healthy for the consumer. I think less competition is a bad thing. I think less choice in the petrol station you go to is generally a bad thing. Senator Barnaby Joyce, a coalition member, agrees with that. He thinks it is a bad thing and he says that what this government is doing is bad—in fact, he believes it is so bad that he has threatened to vote against the government and to cross the floor unless amendments are made to the Trade Practices Act to further safeguard independent fuel retailers. I say to Barnaby Joyce, ‘Hear, hear!’ He should be out there condemning this government on this bill, because it just does not do enough, and some of the things that it does go in the wrong direction. It does not go anywhere near far enough to protect independent service station operators and franchisees.

The final measure in Labor’s plan is to reduce our reliance on imported oil and to grow an Australian fuel industry. This is a very important part of our plan because it is another area that the government just feels too comfortable and relaxed with and does absolutely nothing on. Not only do we need to promote competition and ensure a strong regulatory regime; we need to ensure that there is a viable, strong Australian fuel industry that is supported by government in the right manner. We need to invest in alternatives and support innovation. We need to ensure that we as a nation do the right thing.

I will come back again to the member for New England because he mentioned hundreds of millions of dollars in grants going to the fuel industry. This is an area where the government could seriously look at how that money is spent, the areas it is spent on and what innovations could come out of that investment from the national government in the fuel sector.

Labor’s plan is to provide a real future for the biofuels industry by providing a government fleet market for ethanol blends, to set an example and help grow the industry. I think you have to lead by example in an area like this. There has been a lot of scaremongering about biofuels, about ethanol blends and about what they do and do not do to your vehicle. Government could lead by example by using ethanol blends in all government vehicles. The Queensland government is leading the way in this and doing a very good job of it, and there is a slow but steady take-up of ethanol blends. I think that is something positive that should be supported, because it goes to the heart of a range of things that our plan for the fuel industry does. It is about the long term. It is about investing in the future. It is about fuel security. It is about being fuel independent over the long term. It is about building industry. It is about looking to the future. These are the things that are lacking in this government’s approach to the fuel industry more broadly.

I also want to take this opportunity to talk about alternative fuels. The Australian Labor Party also has a plan to develop a diversified Australian fuel industry. Labor knows that Australia must develop and use those fuels that will become cheaper in the future, that are sustainable and renewable. We must look to the future. We must have fuel security. We must be independent. Australia must foster demand for new Australian fuels and fuel technologies, with governments at all levels playing a role. I think that is also key here. We need agreements between local, state and federal governments, particularly in these areas.

Australia needs national leadership to develop this, though. It can do it in three ways: by existing alternatives like liquid petroleum gas, ethanol and biodiesel; by emerging alternatives such as compressed natural gas, liquid fuel from gas and stored electricity; and by looking towards future fuels, such as hydrogen. There are options for government. Government needs to be interested. That is the key point I am making here: unless government takes an interest, nothing happens at all.

Australia needs to develop the technologies to make it happen. Our transport fuel markets need a fresh blast of competition—competition that, in the end, will drive development. To this end, a future Labor government will work with the states to steadily and sensibly convert public transport to alternative fuel usage and to ensure that the Commonwealth government car fleets run on alternative fuels. As I said previously, the states are already moving in that direction, and I congratulate them for that. Again, this is an area where the federal government could show some leadership and flow that on to other areas.

A future Labor government will also work with state and local government to give city traffic and parking advantages for alternative fuel vehicles or hybrid vehicles and the like. There must be rewards for people who do the right thing, who are using alternatives and trying to make a difference. If you do not reward people, they will not necessarily take up those advantages. Also, a future Labor government will make alternative fuel vehicles tariff free, cutting up to $2,000 off the price of current hybrid vehicles. Again, you must reward people for making the right choices.

Finally, a future Labor government will examine the granting of tax rebates for converting petrol cars to LPG. This has been a pet issue of mine for some time. I just cannot understand why, in the current fuels environment, government does not get more involved in a readily available resource, in something that could be easily dealt with and in trying to assist people in converting petrol cars to LPG and looking at other incentives.

These measures over a fixed period would help spark consumer interest and raise awareness of alternative fuel choices. In the end, we need to give people choices—not the rhetoric of choice but real choices—at the petrol bowser, where they can decide on the types of fuels that they will be using and the sorts of prices that they will pay. For example, some 500,000 Australian vehicles at the moment run on autogas. In fact, car conversions from petrol to LPG have risen 14 per cent in the last 12 months. That is pretty obvious, given the high petrol prices. Certainly, in years gone by, the percentages of people converting cars over were going backwards because there was just no incentive for people to move in that direction.

The NRMA announced last year that its fleet of 400 service vans would move across to LPG, cutting 60 per cent off its $2 million fuel bill annually. There should be a message in that to a lot of businesses to look at the cost of conversion and the sorts of fuel savings they could enjoy by moving in that direction. In this regard, an example can also be found within the State Transit Authority of New South Wales, which has 404 compressed natural gas powered buses in Sydney. CNG powered buses are quieter than diesel powered buses. Obviously CNG makes a great alternative to regular fuels—and CNG is an Australian resource, whereas diesel is largely imported. State Transit purchases $30 million worth of diesel fuel annually, so I think people can quickly see the sorts of advantages and savings that can be made by moving in this direction.

There is now a willingness to use alternative fuels that has not previously existed in Australia. The LPG industry itself has set a target to increase the use of autogas to 10 per cent of all motor vehicles by 2010. If only the Howard government, the federal government, would be as decisive and back it with programs and incentives. Consumers are also showing a strong interest in the emerging technologies of hybrid cars, for example. Last year, over 1,000 hybrid electric cars like the Honda Civic and the Toyota Prius were sold in Australia. But if we want to see real numbers of people driving these cars on our roads then the federal government ought to take an interest and look at how they deal with this area. These are small but significant steps. If consumers are prepared to embrace new technologies, they need to be given real choices by government. They need to be given assistance in making those industries work and in making those choices work for them as well.

I would like to speak just a little further on the need to develop new industries in this country, specifically about gas to liquids and coal to liquids technology, which I think are exceptionally important in the current debate. The Labor Party has always been a great supporter of GTL and CTL. In fact, my colleague the member for Batman, Martin Ferguson, has been speaking about this issue for quite some time—and for good reason, because it is in the best interests of the nation. Establishing new nation-building industries is obviously not easy. It requires leadership. If this government is not prepared to provide it then the Labor Party is prepared to and will do so.

Unfortunately, as I have said at a number of points in my contribution, the federal government are seriously asleep at the wheel on this issue. They turn to the fact that it is just a global market and it should be left to global market forces to drive all of these matters. They are simply wrong. In fact, some people would remember that about five years ago Senator Nick Minchin, the then Minister for Industry, Science and Resources, appointed a GTL Taskforce to investigate the feasibility and benefits of establishing a GTL industry in Australia. That task force came up with this conclusion:

Provision of common user infrastructure is a legitimate way in which Australian governments could facilitate the establishment of a GTL fuels industry.

Five years later, though, there has been no action. It was a good report with some sensible recommendations—something the federal government could invest in and do something about—but five years later: no action. Obviously there is no imperative from government to deal with the issue of fuels. The task force also highlighted the potential significance of a GTL industry to Australia’s economy. It said:

These benefits would be of national strategic significance to Australia ... The cost of any government intervention must be considered against the potential benefits.

Again, that is wise counsel, which, unfortunately, has been ignored by the government. As has been pointed out by Labor’s resources spokesman, the potential benefits go beyond unlocking new resource wealth and creating new industry, more jobs and more experts. They include the opportunity for Australia to address this most pressing of problems: our future transport and fuel security.

In the final few minutes I have I would like to make mention of a couple of other points in relation to fuels generally. In my view, the price of petrol has gone beyond what it costs to get to work and to go on a Sunday drive. It is now as critical to people as the underlying cost of their mortgage and as critical—and watched as significantly—as an interest rate rise, because the impact of fuel prices today on the family budget is as significant as a quarter per cent rise in interest rates. Families are under a lot of budgetary pressure. While the government crows about a strong economy, most families are living well but are at breaking point. Although there are low interest rates in Australia—comparatively high for the rest of the world—families cannot quite seem to manage. If people were to lose their job for just four weeks, most would be in serious trouble, much more trouble than they would have been when interest rates were, for a very brief period, at 17 per cent, and I think the government ought to look at that very closely. (Time expired)

Michael Hatton (Blaxland, Australian Labor Party) Share this | Link to 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)

Julie Owens (Parramatta, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Fuel Tax Bill 2006 and the Fuel Tax (Consequential and Transitional Provisions) Bill 2006. This is an important debate, but it is a very small part of a much larger debate which this nation should be having centring around the use of energy and the way we develop our energy resources for the future. We have touched on some of those issues in our second reading amendment. Energy is an issue which is being debated widely in the community at the moment. Petrol prices are rapidly rising, putting incredible pressure on family budgets. There are conflicting views in the community and in this parliament on the signing of the Kyoto protocol and we have at the moment the furphy of nuclear power raised by the Prime Minister last month thrown into what is a vacuum of the larger policy of energy in Australia. There is a lack of talk in this place even on alternative sources, of Australia’s ingenuity and of ways for us to shield Australia from oil price shocks in the future by developing alternative sources within Australia both for use within Australia and for export.

But today we are talking not about that but about a very small but important part of it, which is fuel tax. There are 19 speakers on the opposition side for these bills, which reflects how importantly we on this side view the entire energy debate and how few and far between are the genuine opportunities to debate this important matter in this parliament. The fuel tax bills today do not deal with the general motor car use of mums and dads and motorists but specifically with some businesses and particularly regional areas. The legislation plays around the edges. It makes some very important changes and those changes are needed. They have been needed for some time. In fact, the government has made four announcements about the reform of the fuel excise rates over the last few years. The first was in the 2003-04 budget, where the government outlined the reforms, and then in December 2003 the Prime Minister elaborated on the budget announcements. In March 2004, the government extended the transition path for fuels becoming subject to excise. In June 2004, they released their energy white paper, and the Treasury, quite independently, on 27 May 2005 introduced a paper called Fuel tax credit reform: discussion paper. So there have been at least four major announcements on the need for this reform dating back to 2003-04.

Essentially this bill implements a system of credits to offset either partially or fully the excise that some taxpayers pay on fuels and to lay a groundwork for extending the tax net to alternative fuels, both current and developing. Most fuels are subject to excise, when a fuel is produced in Australia, or customs duty, when the fuel is imported, and also to the goods and services tax. This bill relates to excise and customs duty. The bill also deals with the Energy Grants (Credit) Scheme, which allows users to recover some or all of the excise and customs duty on fuels. That system is administered by the Taxation Office, which publishes the grant rates on its website. This bill essentially moves some of those processes around. It simplifies the process into one process through the BAS system. It increases tax for some and decreases tax for others. Some will pay less, few will pay more and it introduces a tax regime for alternative fuels which will be introduced over a number of years. The current arrangements for taxation of fuel in Australia are highly complex and there is much scope for rationalisation.

The proposed changes from 1 July 2006 seek to consolidate a range of measures into a single fuel tax regime with credits achieved through the BAS reporting system. Many users will effectively receive the same level of tax credit but under different administration arrangements. As I said, some will face more tax and some will face less. Under the current system, off-road use is treated differently to on-road use, as it is in this new bill. Under the fuel tax credit system, all taxable fuel acquired in, manufactured in or imported into Australia for use in off-road applications for business purposes will over time become tax free. There will be effective fuel tax-free status introduced for business off-road use. On-road users, on the other hand, will face increased taxation, the 20-tonne threshold will be removed and vehicles over 4.5 tonnes will pay fuel tax at the level of the road user charge and receive a fuel tax credit for other tax. The Fuel Sales Grants Scheme will be abolished over time. The scheme costs $256 million per year and provides a grant for sales of gasoline or diesel of up to three per cent per litre in non-metropolitan regions.

The bill has been supported by most producers, but it has been opposed by the ACCI due to the cash flow implications for small to medium enterprises. Currently, remission certificates permit some industries to receive fuel excise free, but under the proposed regime these fuel credits will be received only after the BAS has been lodged and processed by the ATO. This will cause cash flow problems for many SMEs, who may have to wait almost 50 days between paying the excise and receiving the fuel credit. This morning, some two hours before the debate began, we received a new amendment from the government which will provide short-term relief for that but only for two years. In recognition that this will cause considerable hardship for many small businesses, they will be able to receive their credit early, but at the conclusion of those two years the regime will revert. So this is not a solving of the problem at all, merely a pushing of the problem away for another two years.

It would be nice if this government, particularly given that it has known about these reforms since 2003-04, spent more time getting the bill right in the first place. This is why in its second reading amendment the opposition condemns the government for failing to properly consult with commercial fuel users on the appropriate model for payment of fuel tax. This is a system which suits the Taxation Office but does not suit the many small users who have built their business models and cost structures around the existing concessions made at the time of fuel purchase. The amendment also condemns the government for circulating major amendments less than two hours before debate on the bill. Most people not in this parliament would assume that when one receives an amendment one can actually read it. Amendments actually read like this: ‘(1) Clause 2, page 2, table 8, omit parts 1 to 4, substitute parts 1 to 4A.’

There are three pages to this amendment. In the debate on the industrial relations legislation we saw 300 amendments written like that, and they were debated and voted on within 40 minutes. They are not amendments you can read; you really do have to sit down with the bill and insert those amendments one by one. To receive this sort of amendment two hours before a debate when the legislation is clearly contentious for large sections of the industry not only does not allow the opposition—or the government, for that matter—to seriously consider the amendment but also does not allow any debate by or feedback from the industry that will be affected by this bill.

It is extraordinarily arrogant of this government. Lately we have seen a lot of inability on the part of the government, in spite of knowing sometimes for years that legislation is to be introduced, to consult fully with industry or to give anybody a chance to provide appropriate feedback on bills being debated in this House. As members of parliament, we can all fool ourselves into believing that we know best. Occasionally maybe we do, but nobody knows as well as a group of people putting their views together to find the best outcome.

The opposition also calls on the government to reduce Australia’s dependency on foreign oil and to promote existing alternatives like liquefied petroleum gas, ethanol and biodiesel, emerging alternatives such as compressed natural gas, liquid fuel from gas and stored electricity, and future fuels such as hydrogen. Under this government Australia is a country without a national goal on energy. We on this side of the House believe that a strategy must be developed. We need leadership on this issue. We need national leadership to develop the natural talent for innovation that Australia has in existing areas such as liquefied petroleum gas, ethanol and biodiesel, to explore emerging alternatives such as compressed natural gas—one of the great natural assets of Australia—liquid fuel from gas and stored electricity, and to explore future fuels such as hydrogen. We also need to develop the technologies and techniques to make all this happen. We need a serious investment, a serious plan and a serious commitment to finding alternatives to fossil fuels. We must make Australia less reliant on foreign oil, which affects our trade deficit, creating foreign debt. By developing alternative fuels, we place Australia in a very good position to export to the world.

We also condemn the government for ignoring the impact of rising petrol prices on Australian families. We see it in all our electorates. The increase in petrol prices is clearly hurting Australian families, who on average are spending around $10 per week extra on unleaded fuel compared to just a few months ago. Since January, the average cost of unleaded petrol has increased nationally by 22 per cent. The $138 million increase confirms the reason that consumer sentiment has fallen by 13.3 per cent. A family that drives a 2000 model Holden VT Commodore is paying an estimated $18 extra per week, while a 1999 Ford AU Falcon Futura costs $16 more to run per week and a Mitsubishi costs $13 extra to run per week.

I recently visited a school and was talking to some grade 5 and grade 6 children. I had been there for about an hour and they were asking all the usual questions about whether I fly or drive to Canberra—all the really important questions that children ask of politicians and that we have all experienced. One of them asked me about my car and I explained that it is provided as part of my salary. This little boy said, ‘Do you pay for your petrol?’ I said, ‘No, I don’t; it’s paid for as part of my package.’ The entire group of children took in a collective breath in shock and outrage that I was somehow exempted from the pain of petrol prices that even grade 5 and grade 6 kids understand. Grade 5 and grade 6 children know that their families are suffering because of the price of petrol. I know some members have been in this House for a very long while and have not handed over their cash at a petrol pump for many years, but Australian families are and they are doing it more frequently and paying more for it than ever before.

We also condemn the government for failing to strengthen the Trade Practices Act to protect competition in the petroleum industry. Labor has been talking for many years about the need to strengthen the Trade Practices Act to protect small business from unfair competition from megacompanies. In the petrol industry it could not be more important than it is now. The government has been extremely slow in acting in this area. We have been calling for it for quite some time—it has been part of our policy at each election—and it is desperately needed not just in this industry but in many others as well. Finally, we condemn the government for failing to guarantee that the money saved as a result of the abolition of the Fuel Sales Grants Scheme will be specifically directed to roads in regional, rural and remote Australia.

In summary, there is some good work in this bill. To some extent it does simplify some extremely complex arrangements. It phases in taxes on alternative fuels. Labor has been arguing for some time that these taxes not be introduced rapidly but rather phased in over time. The phasing in and out of the other regimes does provide some opportunity for businesses to respond and to build these changes into their cost structures. We are disappointed that the government has not found a real solution to the problem for small to medium enterprises caused by the claiming of credits through the BAS system rather than up front. We urge the government to seriously consider that problem and refer the matter to a Senate committee for further consideration.

We also urge the government to take seriously the opposition’s calls for a much stronger debate on energy in Australia—one that actually canvasses all the options and not just the furphy of nuclear power. There are many other alternatives for Australia. We have an abundance of sun, wind, natural gas and coal. The opportunities for this country in those areas are quite extraordinary. In our people, our skill and our natural resources we have a talent in those areas, and we should be exploring those to the full.

Gavan O'Connor (Corio, Australian Labor Party, Shadow Minister for Agriculture and Fisheries) Share this | Link to this | Hansard source

The opposition will be supporting the Fuel Tax Bill 2006 and the Fuel Tax (Consequential and Transitional Provisions) Bill 2006. However, I state to the House my support for the second reading amendment which has been moved by the member for Hunter. I believe the member for Hunter has foreshadowed further amendments that may be introduced in the consideration in detail debate, and of course I will be supporting those. This legislation creates a single fuel tax regime with credits approved through the business activity statement system. It essentially provides transition arrangements to phase in the fuel tax credits scheme while phasing out the Energy Grants (Credits) Scheme, the Fuel Sales Grants Scheme and the state administered Petroleum Products Freight Subsidy Scheme. The purpose of the legislation is directed at ensuring that claimants receiving a grant continue to benefit from fuel tax concessions and at phasing in over time the extension of eligibility for the off-road business use of fuel. Currently ineligible off-road activities will become eligible for a 50 per cent fuel tax credit from 1 July 2008 and for a full credit from 1 July 2012.

Much has been said in the debate on this legislation about the current state of fuel taxation in Australia. The general public could be forgiven for asking what the Australian parliament and successive governments have been doing up to this point in time about this very complex area of taxation. It is a scandal, and I do not mind saying that after 10 long years of the Howard government we finally have legislation presented to the parliament which the government itself is still busily amending. I reiterate the comments of the previous speaker in this debate: one would have thought that the government, with all the resources at its disposal, could have developed a coherent fuel policy for Australia and developed over time a less complex fuel taxation system, if that is indeed the way that this Treasurer wants to raise revenue for government purposes.

The current arrangements for the taxation of fuel in Australia are highly complex and there is enormous scope for rationalisation. After 10 long years, this legislation seeks to introduce some rationalisation of the current scheme. It is important to note that the current bill does not change the taxation of petrol for basic household motor vehicle use. Under the current regime, a grant is available for diesel fuel under the Energy Grants (Credits) Scheme. There is an on-road credit, which includes alternative fuels, for vehicles over 20 tonnes, for vehicles between 4.5 and 20 tonnes and for vehicles operating outside or across metropolitan boundaries. Off-road credits apply to business usage and a fuel sales grant, under the Fuel Sales Grants Act, of 1c to 3c per litre of gasoline or diesel fuel in non-metropolitan areas applies. Remission certificates apply to exempt commercial users, in industries like plastics and chemicals, from excise or customs duty on certain types of fuel. The proposed changes, to apply from 1 July 2006, seek to consolidate these measures into a single fuel tax regime with credits achieved, as I have stated, through the BAS reporting system. Many users will receive the same level of tax but under different administrative arrangements, and of course the cost of compliance and understanding will fall on those businesses. Some users will face significant tax reductions, and there will be a higher tax for some on-road use. Aviation fuels are excluded from the fuel tax credit system.

Labor’s position on this has been articulated by previous speakers and I will not canvass too widely those statements. Labor supports the basic structure of the bill as providing a more sustainable basis for fuel taxation in Australia. In the general scheme of things, the bill is a major reform of fuel taxation in Australia. It provides for many things: a single system of fuel tax and associated credits, reductions in the incidence of fuel tax levied on taxable fuels and a staged introduction of a framework for the taxation of liquefied petroleum gas, liquefied natural gas and compressed natural gas from 1 July 2011. It provides for a staged reduction in tax assistance for biodiesel and domestic ethanol and it links fuel credits to environmental standards, something for which Labor has argued for a long period of time.

This legislation had some serious shortcomings for small and medium sized enterprises in Australia, which have been the subject of significant representations by people in my constituency and by members of the farm sector in my capacity as the shadow minister for agriculture. Their main concern was the provision, under the originally proposed regime, that fuel credits would be received only after a BAS had been lodged and processed by the Australian Taxation Office. It was estimated by many of those seeking change in this area that many SMEs that lodged business activity statements would have something like a 50-day delay between paying the excise and receiving the fuel credit. As we know, the ATO has not had an exemplary track record of processing activity statement refunds quickly, so the provisions as they stood were going to lead to significant cash flow problems for many small businesses.

Labor particularly has worked very hard with those sectors to put pressure on the government to look closely at this particular provision and change it, which the government has done. The government has made a minor concession that extends the sunset period by a couple of years. But, as we know, these are ongoing problems for small and medium businesses. I think it is a reasonable proposition that we extend that sunset clause indefinitely, and I will certainly support any measures to do that.

For example, Labor was approached by the ACCI, which had real problems with the new legislation. We were also lobbied by the farm sector and other business lobby groups—of course, that lobbying effort was directed at government members also—and changes have been made. So we would welcome any change in that regard, but more particularly we think it ought to be extended beyond that two-year period.

The issue of fuel is one of direct concern to my constituents and the people whom I seek to represent in my shadow ministerial portfolio in the farm sector. As you may well know, Mr Deputy Speaker, my electorate of Corio encompasses most of Geelong. We have some tens of thousands of people who every day travel to Melbourne for work. Most of those people travel by car. I am not saying that that is the most efficient way to move people between Geelong and Melbourne. I commend the Bracks government for the recent upgrading of the rail system and the introduction of the fast trains between Geelong and Melbourne, and I commend those people who seek to use that transport mode to get themselves to their place of work. But the reality is that, for convenience, many people in my electorate travel to Melbourne for their work by car. They have to do that. They have been affected deeply by the rises in oil prices that have occurred which have translated into higher prices at the petrol bowsers in my electorate and in Melbourne. The simple reality is that most of those commuters are facing quite significant increases in their fuel bills, and these issues of fuel taxation are very important to them.

They are also important to the farm sector, because the cost of fuel is a significant input into the production of agricultural produce in this country. Much production is undertaken in rural and regional areas that are quite far away from ports and the markets in which we sell that produce. When you look at the inputs that come from petroleum based products into farm processes you see that it is not just confined to fuel but to fertilisers, and the rising international price has impacted very heavily on the baseline costs of farmers on-farm. It has also affected the delivery of goods into regional areas—the delivery of spare parts and general household items. The general cost structures are moving as businesses adjust to the new economic environment typified by high petrol prices.

There is a simple reality about Australia’s position. We are terribly dependent on foreign oil, and that dependence is growing. For example, petroleum based fuels account for 97 per cent of Australia’s transport needs. That is an extraordinary statistic. The reality is that we are consuming petroleum based products at a rate some three times faster than we are finding those resources. At the end of the day, as we all know, there is a finite limit to these resources. No matter how you look at the situation, we could go on finding huge reserves of oil but, as we know, at the end of the day, at quite significant rates of consumption, those fossil fuels are going to run out whether it be in 10, 20, 30 or 100 years.

I have some experience of this. As a young man I happened to work as an administration manager on the construction sites in North Sea oil, where British Petroleum contracted the company that I worked for to extract oil from the North Sea. The technology that was being employed was at the forefront of the recovery technologies at the time. The company that was involved was a significant Texas contractor which is well known to people on both sides of this House. The Texans who worked in that particular company made no bones about the fact that, once the oil was discovered, caps would be put on the oil and the companies would wait until the price increased to release it. I found that quite staggering as a young person, knowing that households and people depended so much on fuels to generate their livelihoods. But here I was working with a company where, although there were huge exploration costs involved, once the product was found, the caps were being put on the oil wells and the supply trickled out to influence the eventual price, given the demand. I mention this example because, at the end of the day, either Australia is in a vulnerable position on this particular issue or it is not. That is the reality: we are either vulnerable or we are not. There are degrees of vulnerability, and at the moment we are highly vulnerable—and we should not be. That is the simple logic of what we have seen take place over a period of 30 years.

Some of us in this House can actually remember the 1974 oil shock. That was supposed to be something that created enormous difficulties for the then Labor government. The then opposition would not hear of any excuse about a trebling of the price of oil feeding into the cost structures of businesses and farms. There was no concession or quarter given to the Labor Party then, but we have seen over the last couple of years a trebling of the oil price again. This government has had at its disposal over a decade a whole raft of things it could have done to much better prepare Australia for the situation it now finds itself in.

Crude oil and refined petroleum now constitute the largest item on our trade accounts—that is, crude oil in 2004-05 was the second-biggest import, at $15 billion. The statistics are quite alarming. In 2005-06 Australia relied on imports for 17 per cent of our petroleum consumption. Those are figures produced by ABARE, which estimates that by 2020 that will rise to 46 per cent. The Australian Petroleum Production and Exploration Association think it will be closer to 78 per cent. So somewhere between 50 and 80 per cent is probably a reasonable guesstimate. We tend to rely on those two bodies for their expertise in making these sorts of predictions. Even if that is the case, we are highly vulnerable and dependency means terrible exposure to any rises that take place or any events that will affect the demand or the supply of petroleum based products.

The economic impacts are substantial. We have seen a trebling of oil prices in three years globally, and that has started to feed into inflationary pressures. It has already impacted on household budgets in Geelong. It is being used by this government as an excuse for the brakes being applied to growth. I am not disputing that that is an economic impact; but, for heaven’s sake, we have known about our dependence on petroleum based products for a long period of time and we are only now getting the fuel tax regime right and we have no alternative fuel strategy of any moment in place. I get sick and tired of members opposite saying that Labor is a policy-free zone. We are an opposition with limited resources, yet we could come up with a comprehensive policy. You have been in government for some 10 or 11 years and you are still in a mess. The nation is highly vulnerable and we are all going to pay a price for your incompetence.

Kim Wilkie (Swan, Australian Labor Party) Share this | Link to this | Hansard source

The member for Corio will remember to refer his remarks through the chair. I wish I had been in government for 10 years!

Gavan O'Connor (Corio, Australian Labor Party, Shadow Minister for Agriculture and Fisheries) Share this | Link to this | Hansard source

I do apologise to you, Mr Deputy Speaker. I really am referring to the imbeciles opposite, who have not been able to put together a coordinated policy in this regard. Labor do have a policy. We intend to set up a regional resource infrastructure fund. We all know that Australia’s reserves are in remote areas and we really need to support the development of any additional resources with infrastructure. We have a policy to foster demand for new fuels and technologies. Kim Beazley, the Leader of the Opposition, has made quite plain in his blueprint what we would do. It is quite simple. We have said we would make alternative fuel vehicles tariff free, cutting up to $2,000 off the price of current hybrid cars. We would work with state and local governments to give traffic and parking advantages to these vehicles in the city. We would examine the granting of tax rebates for converting petrol cars to LPG. Those measures will have some effect.

With regard to the global race for innovation and the development of new fuels and fuel technologies, we will conduct a feasibility study into gas-to-liquid fuels plants in Australia, offer petroleum resource rent tax incentives for developers of gas fields which provide resources for gas-to-liquid fuel projects, work with industry to improve engine design and fuel quality standards, develop an ethanol and alternative fuel industry and examine a new infrastructure investment allowance for investment in Australia’s gas-to-liquid infrastructure. That is not the end of the story. There are a whole range of things a national government could do to develop a coherent and comprehensive fuel strategy for this nation to reduce its dependence and its exposure on petroleum based products. This government has not done those things and it stands condemned for not doing them. (Time expired)

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

I join with the member for Corio in condemning the federal government for its failure to develop an adequate and proper policy, a policy that looks to the future in this area. Unfortunately, we in this House find ourselves reacting to just about every issue, because that is the way this government works. Unfortunately for the people of Australia, I do not think it has reacted soon enough to the need to look at reforms to fuel tax and to look at alternative sources of energy. Australia as a nation will pay for the failure of the Howard government.

The Fuel Tax Bill 2006 and cognate bill constitute major reform to fuel taxation in Australia. They provide for a single system of fuel tax and associated credits. They also include measures for 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 the linkage of fuel credits to environmental standards. We will be supporting much of what the government has included in these bills, but we do not support the government’s ineptitude and its failure to address the real issues that are facing the people of Australia.

The proposed changes consolidate measures into a single fuel tax, which is a good idea. It is good policy, it makes it easier, simpler, and it does this with credits achieved through the BAS reporting systems. Many users will effectively receive the same level of tax under different administration arrangements, but some users will face significant tax reductions. There will be a higher tax for some on-road use. Aviation fuels are excluded from the fuel tax.

It is my understanding that the way the government is linking it to the BAS will cause some problems. The Australian Tax Office is notoriously slow in returning moneys and dealing with matters that are sent to it. My office is constantly deluged with problems constituents have with the ATO, including that of facing delays—although that is currently not a problem. As to the administration of the fuel tax credits regime, it will be claimed on the BAS in the same way as input tax credits are claimed for GST. Because of these delays, there is the potential to cause major cash flow problems for medium-sized producers. These producers are effectively fuel tax free due to the remission certificates for excise and customs on fuel input. Now they must pay the fuel tax and get the credit when they lodge their BAS. Producers with a turnover of $20 million must report monthly for GST purposes. I have been arguing that GST refunds are not provided quickly. Businesses with $2 million to $20 million turnovers report quarterly and thus face major delays between payment of the tax and the associated credit. This can cause cash flow problems.

That is from the business perspective. I would like to turn to the amendment moved by the shadow minister, the member for Hunter. The first part of the amendment deals with the failure of the government to address issues around petrol prices. The people of Australia have been dealt a double whammy of soaring petrol prices and increased interest rates, with two interest rate rises since the last election. What has the government done to deal with these petrol and fuel price increases? I argue they have done very little. The Prime Minister has said there is not much he can do. He has given up. He has put it in the too-hard basket. Those people who rely on the government to solve problems, those people who rely on being able to purchase affordable fuel, should expect a little bit more from their Prime Minister than saying, ‘It’s too hard; I don’t know what I’ll do about it.’

The people of Australia think that something should happen. I refer to a letter I have here from a constituent, Mr Jack Cambourn of Chain Valley Bay. He wrote this letter to me just after the Easter break. He pointed out that the public’s attention is always focused on the price of petrol and the way the price of fuel increases around a holiday break. He was referring to Easter, but I note that within my electorate, prior to the long weekend, the price of petrol was $1.49. Today it has dropped down to $1.42. This is the phenomenon that Mr Cambourn was referring to in the letter he wrote to me. He said:

Fuel costs are passed on to the people in every item they buy in the super market.

I think that is an important factor. When we are in there buying our fruit and vegetables, we must be aware that the high prices we are paying for them are a direct result of the Howard government not acting to constrain the price of fuel or to look at alternative fuels. He goes on to say:

Those who do not own a vehicle pay, but clearly the vehicle owner pays twice, once at the service station, and again at the super market.

He goes on to ask:

Do we have to go on paying?

He said:

The Prime Minister was on the Tele recently discussing the problem of increasing prices of motor fuel. “There’s nothing we can do about it” says the PM.

As I mentioned earlier, he threw his hands in the air, abrogated his responsibility and said, ‘There’s nothing I can do about it.’ Mr Cambourn continued:

Immediately a scene appeared on the screen showing a mass of people on the floor of the New York stock exchange. We were told they were stockbrokers bidding for stock in oil companies.

He goes on to make the point that this activity can have an effect on world oil prices. He says:

There are 65 countries around the world who possess natural deposits of crude oil, Australia is one. Some are known to sell motor fuel into their domestic market at a lower price than they would sell it into their export market, but not Australia.

The USA is one, Venezuela is another. Within the past three months the US was selling motor fuel for $US2.80 a gallon.

He goes on to talk about converting these prices to Australian dollars. He went on to say they were much lower—less than half the price that we are paying now. He goes on to argue that the Howard government should look at things a lot more creatively. He then goes on to say that it is up to federal members of parliament to try to resolve the problems of all those families whose interests we have been elected to this parliament to support and to look after.

Another constituent who has been very active in community groups and does a lot of volunteer work is now unable to do so because of the increase in the price of petrol. Parents are telling me that they are no longer able to take their children to those sporting activities that they have been involved in for a very long time. As with other things, that is a double-edged sword because it impacts on the health of our young people, which in turn can lead to an increase in obesity and health problems into the future and which increases costs to government—all because the government has failed to look at the issue of petrol prices.

Floraville Public School, in my electorate, is a lot more far-sighted than members of this government. Last week students from Floraville Public School interviewed me on the telephone. They asked me about ethanol and alternative fuels. They asked me whether I supported their use. They asked me about the sorts of policies the government should be introducing and how the government could address the issues and look at alternative fuels. I gave an answer from my perspective—as a Labor Party opposition member of this parliament who can see that this government’s inactivity is costing Australia in a big way. The students will write a report in their school newspaper that will detail whether they think that what I support is a much better alternative than what the government has done—which is nothing.

The abolition of the Fuel Sales Grants Scheme will mean an increase in costs to regional areas. There is no way the government can walk away from that. Once again, the government have handled that very badly. They have not looked at the impact of their decision. The government should read the article that the students of Floraville Public School put in their newspaper about ways of reducing Australia’s dependency on foreign oil and developing an Australian solution—that is, an Australian fuel industry. I do not think there is any better example of what could be done than that which has been set out in the Leader of the Opposition’s blueprint for Australian fuels, ‘Developing the Australian fuel industry’.

The Leader of the Opposition highlights the fact that we need to develop a diversified Australian fuel industry and become a more fuel self-sufficient nation which is not dependent on a very volatile oil market and overseas market, which is not open to manipulation by foreign countries and foreign variables and which has a policy that is Australian based. Australian families have been struggling with the increase in fuel prices. Members may have seen that advertisement on television for an insurance company, where the father adds up how much it costs and gives the young boy in the back seat of the car a bill for taking him to school that reflects the increase in the price of petrol. The insurance company offers another solution, but I think the solution is to develop an Australian industry.

I firmly believe the way forward for transport fuels in Australia is to have Australia stand on its own two feet rather than sit there waiting for overseas factors and influences to determine how much we pay for petrol at the bowsers. It is also important that we look at the relationships between the oil companies. For too long the market here in Australia has been manipulated. As I highlighted earlier, the cost of fuel before Easter and before the long weekend just gone was manipulated by the oil companies. I do not see how we could be asked to pay $1.49 on Friday and $1.42 today.

Roger Price (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

It’s a rip-off!

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

As the member for Chifley said, it is a rip-off. Who is being ripped off? The Australian people. Who is allowing this rip-off to continue? The Howard government. The Howard government have to take responsibility for what is happening with the price of fuels. They cannot walk away from it. They cannot throw their hands up in the air and say, as the Prime Minister has done, ‘There is nothing we can do about it.’ There is plenty he can do about it, and it is about time he started to do something. We need national leadership to develop existing alternatives such as liquid petroleum, ethanol and biodiesel, which the kids from Floraville Public School—who are under 12 years of age—can see we need. We need technologies to enable emerging alternatives such as compressed natural gas, liquid fuels from gas and stored electricity and future fuels such as hydrogen. For that to happen, we need a government that supports the development of these new technologies. We need this because our transport fuel market needs a fresh blast of competition—real competition, not the kind of competition that we see currently within the fuel market.

By developing an Australian policy, an Australian industry and Australian alternatives, Australia becomes less vulnerable to external shocks and the possibility of a $5 a litre price at the pump within a decade. I do not think it is unrealistic to say that we are very fast approaching that $2 a litre barrier. I would hate to see us reach that by the end of this year but, unless this government acts and takes some initiative, that is where we will be. Yet all we see is John Howard throwing his hands in the air and saying, ‘We can’t do anything about it.’ He has also said:

I can fully understand the anger of motorists at the price of petrol.

...         ...         ...

World oil prices are not something the Australian Government, or any government, can influence. They are out of our control.

Well, Prime Minister, what is in your control? What can you do? I would argue that there are plenty of things that you can do. I suggest that you start by looking at the Labor Party’s ‘Blueprint Number Three—Australian Fuels’ and acting on it. We do not mind if you steal some of our initiatives—they would be good for Australia. We believe that Australians should not be paying the high prices at the pumps at the moment. We believe that we should have an Australian industry, and it is about time this government acts to see that that happens.

Roger Price (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

It is a privilege to follow the honourable member for Shortland in the debate on this important bill, the Fuel Tax (Consequential and Transitional Provisions) Bill 2006. It provides a single system of fuel tax credits to remove or reduce the incidence of fuel tax levied on taxable fuels. It produces a framework for taxation of gaseous fuels from 1 July 2011, when fuel tax will be, for the first time, levied on liquid petroleum gas, liquid natural gas and compressed natural gas. Under the tax credit system, all taxable fuels that are acquired, manufactured or imported for business purposes will become tax free. The excise levied on burner fuels, such as kerosene, heating oil and fuels used in commercial electricity generation, will be removed from 1 July 2006. Concessions, refunds and remissions derived through the excise will be replaced by fuel credits. A business claiming more than $3 million will be required to become a member of the Greenhouse Challenge Plus program, and fuel tax credits are claimed via the BAS or business activity statement.

In the words of the Prime Minister, the price of petrol is a real barbecue stopper. It does not matter whether you are out in the bush, in a regional city or town, in a capital city or in the western suburbs of Sydney like me—people are feeling the high cost of fuel. They have to pay an extraordinary amount of money to fill up the family car, and that is hurting their budgets. It is quite trite of the Prime Minister to say, ‘It is all because of the world high price of petroleum.’

We have missed a lot of opportunities in Australia. I notice the honourable member for Corio is at the table for the opposition, and I am sure he would agree with me that Australia did a lot to develop solar energy but we have done little to commercialise and take advantage of it. It is a real tragedy. It is very symptomatic of Australia that we can be so good in research and development but not so good on commercialisation and exports. Of course, policies introduced by the Howard government have not helped in that regard. The leader has announced that Australia needs to develop existing technology: liquid petroleum gas, ethanol and biodiesel; developing technology—that is, ‘Let’s get in there quick’: compressed natural gas, liquid fuel from gas and stored electricity; and future technology: hydrogen.

I have had a longstanding interest in ethanol. It stems from the time, too many years ago, when I was reading a Newsweek magazine, which used to be imported into this country; it has subsequently disappeared. It talked about what Brazil was doing with ethanol. Brazil has, for many decades now, produced ethanol from sugarcane. It is by far the cheapest provider of ethanol in the world. Brazil not only uses it in petroleum in vehicles but also exports it.

We have a real problem in Australia. Currently, we provide in Australia, on a declining basis, 63 per cent of our own petroleum supplies. It has been estimated that within 10 years we will be dependent on 78 per cent of imports of petroleum. Currently we are 63 per cent self-sufficient; in 10 years, it has been estimated, that could decline by as much as 22 per cent—that is, we will need to import 78 per cent of all our requirements in the next 10 years.

This is having a horrendous impact on our current account deficit. I have no need to tell you, Mr Deputy Speaker, that for 49 months Australia, one of the resource-rich countries of the world, in the middle of a resources boom, has produced 49 consecutive current account deficits. We need to do something. I feel we need to do something not only about the framework that has been outlined but about ethanol. We need to do something about extending our own self-sufficiency.

I know that there is a view in this parliament that all you have to do is leave it to the petrol companies and—by some process of serendipity or the road to Damascus—they will suddenly want to do the right thing by looking at biofuels, by looking at ethanol. Should they do that, it will be a first. Let us be under no illusions. In America, the very same petrol companies which in Australia deny us ethanol in our petrol are providing it and bragging about it.

There will always be debates on the Labor side about the right thing to do and the best way to go. I make no apologies for believing that we should be mandating ethanol. We cannot leave it to the petrol companies to do the right thing by the people of Australia. We cannot leave it to the petrol companies to try and solve our own self-sufficiency problems, with a rapidly declining basis of petroleum in this country. We cannot leave it to the petrol companies to make a significant impact on our current account deficit. As I say, I believe that we need to mandate ethanol.

Lots of figures have been bandied around about mandating. Of course, if you were to start mandating ethanol, you would obviously want to start ramping it up—that is, initially you would set a target of, say, 2.5 per cent and ramp it up to five, 7.5 and 10 per cent. If we were to do that, we would make a big impact on our current account deficit, and we would also make an impact on our own self-sufficiency. I have some figures here. For example, 2.5 per cent would add another four per cent in terms of the replacement value; five per cent would mean eight per cent; 7.5 per cent, 12 per cent; and 10 per cent, 17 per cent. We ought to be doing these things. We ought to be looking at them. This parliament ought to be having a debate.

It is true that I have been down to the Manildra plant where ethanol is produced as a by-product of wheat processing. It is also true that I have been pleased to meet Dick Honan and his family. I do not know what Dick Honan’s family’s politics are. I do not think it particularly matters or should be important. I can say that they are a great Australian family who have pioneered ethanol. But, in mandating ethanol, we would not be providing any monopoly to Manildra. In fact, if we were to mandate ethanol, we would be not only guaranteeing a future for ethanol in this country but ensuring that future plants would be constructed in rural Australia. That would be providing jobs in rural and regional Australia, adding to the economy of rural and regional Australia and, as I say, helping the current account deficit problem that we have—that is, starting to minimise it—as well as starting to address our issues of self-sufficiency.

There is one thing that you can be sure of, because the government has asked for a departmental report into this from the Minister for Industry, Tourism and Resources. The minister for industry is an opponent of ethanol. He has not really ever supported it appropriately. In fact, I know that the National Party members, whilst they are very keen to see ethanol mandated, know that they cannot get it through this government. They know what the benefits are to rural and regional Australia. They know what the benefits would be to the state of Queensland. But they cannot get it up within the coalition.

On our side of politics, these things are worth while looking at. I see that the honourable member for Prospect is in the House ready to make a contribution. He will know that one of the urgency motions considered at the New South Wales state conference of the Labor Party was the issue of mandating ethanol. That motion sought the intervention of the Premier of New South Wales and the New South Wales Labor government. I must say that I fully support it.

As we search for solutions for the future, I would discount none of the new, emerging technologies, but I do say that we have an opportunity with ethanol. This has been around for not one or two years but decades. It is to our shame, in my view, that the use of ethanol is not at 7.5 per cent or at 10 per cent. I believe that you cannot trust the petrol companies. At the end of the day, the real solution is to mandate it. If the New South Wales state Labor government lead the way, that is terrific. I know that their Country Labor members would be very strongly supportive of it. I hope that, at a federal level, we would look at mandating it. We would look at doing something very serious for the desperate situation where currently we are 63 per cent self-sufficient but within 10 years we will be importing 78 per cent of our petroleum needs. We cannot do nothing—that is not an option.

I will finish on a couple of points. It is an absolute tragedy that the ACCC does not have full power to ensure that the petrol companies are not price gouging. On this side of the House we support the ACCC getting it. Whether or not the chairman of the ACCC wants it, we believe that he should have it and therefore should be required to exercise it. On the government side—that is, on the side of the Liberal and National parties—they say, ‘We’re very content with the status quo. We don’t mind petrol going up 9c or 10c before a long weekend or that there are price variations depending on what day of the week you fill up your car at the petrol bowser; that is just a normal matter in the marketing of petrol.’ It is interesting that, no matter what the brand, all the service stations do the same things on the same day. John Howard says that it is not a problem, Peter Costello says that it is not a problem and the backbenchers on the coalition side say that it is not a problem. I have never heard the member for Greenway get up and talk about this issue which hurts Western Sydney. I have never heard the member for Lindsay get up and say that this is a problem and that we need to give the ACCC—

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

Struck dumb.

Roger Price (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

Yes, struck dumb. I have never heard the member for Macarthur, who is not a bad sort of a bloke, get up and say in his electorate on the very fringes of the western suburbs of Sydney: ‘This is hurting families in my electorate and is unfair to them. I want something done; I demand that something be done.’ But I have heard nothing. I have to say that I have never even heard my learned colleague the Chief Government Whip, the member for Macquarie, say a word in anger over the current situation of petrol pricing in his electorate. Things can be done, and I believe the opposition is the party that will do things. This government has a track record of denying everything and doing nothing.

Chris Bowen (Prospect, Australian Labor Party) Share this | Link to 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.

Daryl Melham (Banks, Australian Labor Party) Share this | Link to this | Hansard source

I rise tonight to speak on the Fuel Tax Bill 2006 and the Fuel Tax (Consequential and Transitional Provisions) Bill 2006. Typically, the government has provided insufficient time for the opposition to analyse the amendments to this legislation. Those amendments were made available only two hours prior to the commencement of this debate. The systemic lack of professionalism and parliamentary courtesy is becoming a hallmark of this government. This is not the first time that the government has done this and I suspect it will not be the last. At this point in time we have also not been able to consult the report produced by the Senate Economics Legislation Committee. As I understand it, that report was to be tabled this afternoon in the Senate but has now been held over for tabling tomorrow.

Australians have a right to expect that their parliamentary representatives conduct debate in an informed manner. This is becoming impossible through the government’s appalling discourtesy and diminishing respect for the parliamentary process—this by a Prime Minister who campaigned prior to his election on the premise that he would raise parliamentary standards. I can tell you, Mr Deputy Speaker, that in the last decade parliamentary standards have fallen. It is all emanating from the arrogant way the government has conducted itself.

Having noted my concerns about the shoddy manner with which the government is dealing with this legislation, I will move on to discuss the bills before the House this evening. With my constituents I remain concerned about the rising cost of petrol for the domestic user. It is this concern which will underpin my remarks this evening. Motorists are understandably upset at the price of petrol. When challenged on this the Prime Minister commented:

... world prices are not something the Australian Government, or any government, can influence.

Let us accept that as a premise. Logically the next question is: what is the government doing about developing alternative strategies to minimise our dependence on world oil and world oil prices? Not a lot, it would seem. In 2004-05 Australia spent almost $15 billion on imported crude oil and refined petroleum. In net terms, Australia relies on imports for 17 per cent of its overall petrol consumption. By 2020 the Australian Bureau of Agricultural and Resource Economics estimates the figure will rise to 46 per cent.

These bills go a very little way to addressing the fuel crisis in which this country finds itself. We must seek ways to diversify our fuel base and establish alternatives. The other side of the picture reveals that, if we do nothing, we will increase our dependence on oil supplies from the Middle East, West Africa and Russia. These are not countries noted for their stability, yet we will be forced to rely on these countries for our fuel supplies. The member for Batman has already commented on the implications that has for energy security.

I particularly note those aspects of the bills which propose new environmental measures: the requirement for large fuel users to be a member of the Greenhouse Challenge Plus program and vehicles using diesel fuels in on-road applications to comply with emissions performance criteria. For the record, I note that Greenhouse Challenge Plus is designed to reduce greenhouse gas emissions, accelerate the uptake of energy efficiency, integrate greenhouse issues into business decision making and provide more consistent reporting of greenhouse gas emission levels. Certainly, Greenhouse Challenge Plus is a tiny move in the right direction to reducing greenhouse gas emissions. Despite this small move forward, I believe Australia must develop a diversified fuel industry. We need cleaner fuels. Australia has fallen behind the rest of the world in the development of a fuel industry plan. In the past three years global oil prices have tripled. One of the results is that business margins are affected and, as that occurs, so consumers face higher prices. We are seeing that pattern now with the recent increase in petrol prices at the pump. It is not unrealistic to expect that the government give consideration to preparing this country for the inevitable future peaks in the price of petrol. Our dependence on foreign oil is growing. Petroleum based fuels account for 97 per cent of Australia’s total transport fuel needs. We are, however, consuming oil three times faster than we are finding it.

In developing a diversified fuel industry, we should expand existing alternatives like petroleum gas, ethanol and biodiesel. We should develop emerging alternatives such as compressed natural gas, liquid fuel from gas and stored electricity. We should consider future fuels such as hydrogen. By playing a more active role in emerging energy sectors, we can boost our export performance and take advantage of opportunities in world markets. Australia must invest in the preservation of our environment by diversifying our fuel base beyond petrol to biofuels, gas and hydrogen. We must prepare Australia now to face the energy challenges of the next 100 years. One of these challenges is to ensure that we do much more in renewable energy resources. For this reason, Labor supports the increase of the mandatory renewable energy target.

Let us consider what is happening in other countries in their attempts to diversify the fuel base. In the USA, there is a five-year plan to develop hydrogen and fuel cell technology. In the European Union, there is significant financial commitment to fuel cell technology. Iceland is committed to becoming the world’s first hydrogen economy. In Qatar, the focus is developing on gas to liquids. In Brazil, all petrol sold contains at least 25 per cent ethanol. Sweden has recently declared it intends to be oil free by 2020. Other countries have a vision of the future which involves planning now. There will be successes and there will be failures, but if we do not start to consider alternative fuel sources the future is bleak. This government has consistently reduced investment in research and development, not increased spending in an area which is so vital to our future. For example, while Australia’s crude oil reserves are equal to less than 10 years consumption, our natural gas reserves are many times higher. No-one can predict what the composition of Australia’s transport fuels will be in 2020, but this is an indication of the difference which could be made if we made better use of our natural oil reserves. If all the natural gas reserves we currently know about were converted to transport fuel, it would be enough to power every car, bus and truck in Australia for the next 50 years.

It is not good enough for the Prime Minister to merely hold office and just seek to go on as long as he can, maybe to break Sir Robert Menzies’ record as Prime Minister. He will be judged at the end of his term and by future generations on the sort of policy initiatives that he and his government introduce. In this area they are sadly lacking. There is no excuse when you have been in government for 10 years because you have had plenty of time to iron out the wrinkles and to produce substantive policy. Instead, we have seen short-term reactive policy on a whole range of fronts. In this area we are out of old fuels but potentially have access to a plentiful supply of new fuels—and that is before we consider developing other fuel alternatives.

Labor has proposed a comprehensive Australian fuel industry plan—a plan which would foster the development of a more diversified fuel base. Labor believes in developing a diversified Australian fuel industry. Labor is committed to putting in place effective incentives for the development of natural gas and for a healthy resources sector in the long term. That is why Labor will re-examine the depreciation regime for gas production infrastructure, allow the selective use of flow-through share schemes for smaller operators and implement regional resource infrastructure funds to help meet the cost of providing supporting infrastructure for onshore gas and minerals processing projects helping to grow the industry. Labor will also foster demand for new Australian fuels and technologies by making alternative fuel vehicles tariff free, cutting up to $2,000 off the price of current hybrid cars; working with state and local governments to give city traffic and parking advantages for these vehicles; and examining the granting of tax rebates for converting petrol cars to LPG.

Australia also needs to lead the global race for innovation in the development of new fuels and fuel technologies. To achieve this Labor would conduct a feasibility study into a gas-to-liquids fuels plant in Australia, offer petroleum resources rent tax incentives for developers of gas fields which provide resources for gas-to-liquid fuels projects, examine a new infrastructure investment allowance for investment in Australian gas-to-liquids infrastructure, develop a targeted funding scheme for research and development in this area; and work with industry to improve engine design and fuel quality standards. Labor would establish a new stream of contestable grants, supporting proposals for research into alternative fuel and its associated technologies. These grants would go to projects accessing existing private and public research money, leveraging in extra funds as well as demanding new priorities from Australia’s research community. Labor proposes to ease regulation of biodiesel production on farms and encourage a sustainable ethanol industry.

Labor has a vision to protect its economy so that it does not fall under the weight of a global oil crisis. We must develop a diversified Australian fuel industry. We must move forward in developing alternative fuel policy. For the life of me, I cannot see why some of these policies cannot have bipartisan support, because it should not be about political patronage from one party or the other. In this area what we need is a long-term sustainable policy—one that is not the subject of the whim of an election campaign or a short-term election strategy. This is the test of the maturity of political parties.

The Labor Party does not subscribe to the view that we should just put our heads in the sand and it will all just develop. I do not see the role of government to be like a moo-cow watching the passing traffic. I am a great believer in governments directing traffic, playing a role and creating incentives for the business sector to build the economy. This is a classic area where I think this government has been negligent and has sat on its hands. It needs to do more.

I support the amendment moved by the member for Hunter and draw particular attention to paragraph (3) which:

... 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 hydrogen.

There is much more to do to reduce this country’s dependence on oil and Labor has proposed a viable plan to do just that. I also draw the attention of the House to paragraph (6) of the amendment, which:

... condemns the government for failing to strengthen the Trade Practices Act to protect competition in the petroleum industry.

I firmly believe that history has shown us that, without strengthening the Trade Practices Act, we are not going to get decent competition in the petroleum industry. People behave like predators—like sharks—and unless we strengthen the Trade Practices Act as it applies to this industry this behaviour is going to continue and the consumer is going to suffer. I think you can push your ideology too far. The free marketeers, who believe you should just sit back and behave like the moo-cow watching the passing traffic, have got it terribly wrong. They, of course, propose the alternative argument that interventionism is wrong. I do not believe a level of intervention is wrong at all, because we do not live in a perfect world. In my view, the role of government is to intervene in the marketplace to create that equity and that fairness to help stimulate that competition. It cannot be left to the players alone. I commend the amendment of the member for Hunter to the House. I say that history will judge this government poorly on what it has done in this area in the last 10 years. It has basically been asleep at the wheel.

Kim Wilkie (Swan, Australian Labor Party) Share this | Link to this | Hansard source

I welcome the opportunity to discuss the Fuel Tax Bill 2006, the Fuel Tax (Consequential and Transitional Provisions) Bill 2006 and the amendment moved by the member for Hunter. These are important bills which significantly impact on a range of businesses and enterprises across the country and also within my electorate. This side of the House supports the general thrust of the bills, although with particular reservations which I will raise later.

As others have mentioned, the bills are reasonably complex. They seek to replace an integrated system of fuel tax concessions with a single system providing credits claimable via business activity statements. These tax credits will replace the grants now provided under the Energy Grants (Credits) Scheme. The bills also introduce some important measures in relation to emission performance and business participation in greenhouse gas abatement programs.

It must be said that we should have been having this debate some time ago. Labor was prepared to debate the contents of the bills well before this week, but fundamental differences within the coalition saw the government back down on implementation dates. This backflip would have been entirely unnecessary if the process had been handled more competently from the start. As I say, the debate of the bills is long overdue and systemic of a typically directionless government unable to properly control its legislative agenda and with ministers who, quite frankly, are not up to the task. In truth, the government has botched the entire agenda relating to fuel tax specifically and to the fuel industry and fuel regulation generally.

While I speak in this place this evening, a family from my electorate is pulling into the BP petrol station in Carlisle and paying $1.33 a litre for unleaded petrol. It is the same price at Coles Express Karawara and at the Caltex in Bentley. According to FuelWatch, the Western Australian government’s petrol price monitoring agency, the average price of unleaded petrol in the Perth metropolitan area in mid-June 2005 was $1.04 a litre. We fast-forward a year and today, 13 June, the metropolitan average for unleaded petrol is $1.36 a litre. As we heard earlier, it is understood that over the course of the long weekend people were paying $1.49 a litre and that after the long weekend that dropped to around $1.42, which is totally unacceptable. The increase in Western Australia over the last year has been roughly 32c a litre or over 30 per cent.

There is no doubt that families are being hurt by higher fuel prices. However, when the government is asked about fuel prices, it throws its hands up in the air and says there is nothing it can do about them. Most telling was the comment by the Minister for Industry, Tourism and Resources, the member for Groom, when asked about fuel security. The minister said, ‘Yes, we do need to find more oil—yes, we do—but short of finding more oil I don’t know what the solution is.’ To say ‘I don’t know what the solution is’ is a cop-out. Australian fuel prices are determined by oil prices overseas, which in turn are influenced by many international factors. I do not believe there is any support for a return to the bad old days of price regulation which distorted market decisions and ultimately did not provide lasting benefits to Australians. But there have been opportunities for the government to put Australia in better stead by minimising our vulnerability and exposure to the vagaries of international oil prices. Unfortunately for all of us, the government has sat on its hands. According to the Reserve Bank of Australia, each 10c increase in retail petrol prices reduces household purchasing power by $300 per annum. Applying the Reserve Bank’s formula to petrol price charges in Perth over the last year, we find that petrol prices, which have increased by 33c in that period, have reduced household disposable income by almost $1,000.

In net terms, Australia relies on imports for 17 per cent of our total petrol consumption but, according to the government’s Australian Bureau of Agricultural and Resource Economics, by 2020 we will be importing 46 per cent of our petrol needs. ABARE’s forecast is optimistic compared to others. For example, the Australian Petroleum Production and Exploration Association, APPEA, predicts that Australia’s oil dependency will rise to 78 per cent in the next 10 years—that is, a 78 per cent dependency on imported fuels. What can we do about this? How can we make our country less vulnerable to international oil price hikes? There are a number of things that we can do, but the key focus must be on research and development into new fuel and vehicle technologies. This is a national policy ignored by this government. The Leader of the Opposition detailed Labor’s plans for addressing the emerging fuel crisis in his blueprint that was announced last October. It is an excellent document that provides a stark difference between the opposition and the do-nothing-about-petrol-prices government.

Many on both sides of the House believe that there is insufficient competition amongst the oil companies in Australia and that anticompetitive behaviour is causing petrol prices to be higher than they need to be. We all notice the price hikes that occur in the lead-up to holiday periods and long weekends—and a number of speakers have talked about the fact that companies are often putting up their prices in the lead-up to a weekend and over that weekend and reducing the prices after the weekend when demand tends to slacken, which is absolutely absurd and really a rip-off of consumers. On the face of it, such pricing behaviour obviously appears to be opportunistic. Given these concerns, the response seems obvious: the government should immediately direct the Australian Competition and Consumer Commission to investigate these claims fully.

The free market ideologues who believe that the oil industry is ultracompetitive, and therefore there is no problem, oppose this action, but the truth is that if the directions given to the ACCC are comprehensive and if there is no problem with anticompetitive behaviour then surely that is the answer that the ACCC will provide. In other words, there is nothing to be scared of in asking the ACCC to inquire into the price hikes we have seen over the last year and the current pricing practices of oil companies. We often talk about competitiveness in the oil industry, but in reality the competitiveness arises at the bowsers of the different fuel stations that compete by slashing their margins to get people to come to their service stations. In fact, the profits of the oil companies have never been greater than they are now; therefore, we need to look at how we can ensure that consumers are actually getting some benefit. The answer is to ensure that there is competition, and this is where the ACCC needs to step in.

If you look at the ACCC’s website, you see there is a lot of useful information about petrol prices and petrol price cycles. But the last time the ACCC held an inquiry into petrol prices was in 2002 with the inquiry into terminal gate pricing arrangements in Australia and other fuel pricing arrangements in Western Australia. I understand that the review in Western Australia was looking at the price of LPG in relation to the cost of petroleum. Anyone who uses LPG in their vehicle would know that they are being ripped off, but unfortunately we just cannot prove it. We know that every time the price of petrol goes up the price of LPG goes up and usually the match is around half the price of petrol. We know they are up to something, but we just cannot prove it, so we really need to get the ACCC to continue to look at what is going on with those sorts of increases.

Prior to that report in 2002, there were two reports, in 2000 and 2001. Given the significant increase in the bowser price over the last year, it is time for the ACCC to undertake another full inquiry into the pricing behaviour of the oil and petroleum industries. I cannot understand the Treasurer’s continued resistance to doing so. Perhaps he does not talk to ordinary Australian families as I do and he does not understand the fact that families are suffering. That may also explain his surprise and disappointment at not getting a fillip in the polls from his recent budget. If you talk to the families in my electorate, they will tell you that the recent interest rate hike and rising petrol prices negate in many cases any relief from tax cuts and family payment rises. No wonder they are hurting.

It is worth noting that amongst the measures in this legislation before the House is the abolition of the Fuel Sales Grants Scheme. This scheme costs $256 million per year and provides a grant for sales of gasoline or diesel of up to 3c per litre in non-metropolitan regions. The scheme was introduced as part of the GST package to provide some assistance to non-metropolitan Australians. After the scheme had been operating for a couple of years, The Nationals decided that they were not getting any credit in the bush for this initiative and so the then Deputy Prime Minister announced that the government would roll the scheme into funding for the bush through ‘land infrastructure programs’. It is not at all clear that this $256 million has been rolled into such projects. The government should make it clear which new expenditure on land infrastructure will be funded from the abolition of this scheme; otherwise, the switch from this scheme will be seen as yet another swiftie pulled by the government.

Unfortunately, the Treasurer’s recent budget was also a document of surrender, bereft of fresh ideas and long-term vision. The budget failed to grasp the opportunity to increase the use of Australian transport fuels and reduce our reliance on foreign oil. Unlike the government, the Labor Party believes national leadership is needed to develop an agenda for the use of those fuels, which will become cheaper in the future. This is necessary and long overdue.

At community forums and morning teas throughout my electorate, the cry for a national policy to address rising petrol prices and calls for the development of a national fuel industry are clear. My message to the constituents in Swan is this: Labor will deliver this national policy and we will leave no stone unturned in assessing the viability of alternative fuels. We will develop existing alternatives such as liquid petroleum gas, ethanol and biodiesel; emerging alternatives such as compressed natural gas, liquid fuel from gas and stored electricity; and future fuels such as hydrogen. I am very pleased to announce that a lot of the work on technology in Western Australia, or even across the nation in hydrogen technology, is done in my electorate at the Bentley Technology Park by the CSIRO—and they are doing a fabulous job.

Unfortunately, the fuel tax shambles has continued today with the government circulating major amendments less than two hours before debate on these bills resumed. This government deserves condemnation for its failure to adequately consult on the most appropriate model for the payment of fuel tax. It is certainly culpable for the confusion running rampant throughout the industry. Last month we witnessed the extraordinary situation of the minister trying to stamp out a Senate inquiry into these very changes.

The member for Hunter has previously made mention of representations made to me by a local business owner involved in the solvent industry. The business proprietor provided me with a letter sent to the Minister for Revenue and Assistant Treasurer last week. I understand that the member for Hunter tabled that letter earlier. I acknowledge that the minister has only recently received the letter but I would like to raise my constituent’s concerns with the proposed legislation. Let me read the letter in part:

I am very concerned that we were not contacted much earlier about the proposed changes so we could have had an input.

We are one of the biggest solvent re-packers in Australia, we fill out Nature D40 forms now for the ATO, we have a current licence for a bonded site, so it is not like you did not know were to find us.

I was aware that changes to the fuel tax system were coming earlier this year, but that was for fuel, nothing was ever mentioned about solvents, we are not, I repeat not in the fuel industry.

I had to contact the ATO on the 14th of May 2006 and ask what is going on after being asked if I knew about the new tax on Mineral Turpentine from a customer of ours.

What a disgrace, that this businessman has to resort to asking such questions about this confusion. Basically, this constituent will now need to find the money to pay the 38c per litre excise to the solvent companies. He purchases around 490,000 litres per month. Multiply this by 38c a litre. That is an extra $186,200 just for the first month, plus GST. He understands that he will be able to claim some back via BAS statements, but only some of it. The rest he will have to pass on to his customers, but he is required to give notice of price ranges by the contracts he has with these suppliers, in most cases of between 60 and 90 days. So, even though he is passing on these price rises, he is out of pocket until this time frame is met. Unfortunately, my constituent believes that the financial pressures involved may cause him to go bankrupt. I sincerely hope that this is not the case. I call on the government to actively work with him and with other affected Australian businesses to make sure that this does not occur. My constituent concludes his letter saying:

I fully understand what you are trying to achieve but I do not believe that this will make things easier for our company as your literature suggests; it will just create a huge burden for our company, a nightmare in fact. Each time you have changed the legislation, you have done so to solve the problem or to make it more user friendly, but I cannot see how this is any clearer than what we currently have in place. This new system that you are looking at implementing actually hinders our company from doing business. The solvents industry and fuel industry are too different beasts that should not be put together.

Hear, hear! I believe that my constituent has highlighted the impact of the government’s clumsy and inept attempts to address the fundamental problems in its fuel policy in these bills. I call on the government to apply leadership and direction to this important issue.

It was not that long ago that the Prime Minister was alarmed about being called ‘mean and tricky’ by his own party president over the way in which his government dealt with the fuel tax issue in light of the introduction of the GST. Let us repeat what the party president said: the Prime Minister was mean and tricky. Once again, the Liberal Party president has been proved right on the way in which this government approaches fuel tax policy. No wonder he just received a gong in the Queen’s Birthday Honours. He saved the government then by telling the truth. But, on this occasion, the government have failed to heed the lesson—and it is high time they did.

Debate (on motion by Mr Dutton) adjourned.